Qualcomm could face fines of up to $1 billion in China

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Qualcomm, which is currently under anti-trust investigation in China, could face fines of up to $1 billion in China.

China’s National Development and Reform Commission (NDRC) called for an investigation into Qualcomm last year on anti-trust grounds. The NDRC is currently in negotiation talks with the chipmaker; however, it is not yet clear why the investigation is being carried out and the final penalty may hinge on the negotiation skills of the Snapdragon maker.

“We intend to continue cooperating fully with the NDRC,” said Christine Trimble, Qualcomm spokeswoman, when asked about the probe.

The probe initiated by the NDRC comes at a time when the commission is trying to keep a check on all information technology providers in China, especially those companies which that license patent technology for mobile devices and networks.

Industry experts are of the opinion that the government’s main economic planning body, NDRC, has taken this step in order to lower domestic costs as China is going to roll out its faster 4G mobile networks this year.

The San Diego-based chip maker, which will be reporting its quarterly results later on Wednesday, is in a position to charge large amount of licensing fees for the chipsets used by handset manufacturers in China, which is considered as the world’s biggest smartphone market.

Qualcomm is trying to expand its business in China considering the 4G LTE expansion in the country and as per reports, China Mobile, China Telecom, China Unicom and other Chinese telecom firms are planning to invest around 100 billion Yuan ($16.4 billion) on 4G network equipment.

The NDRC, as per the anti-monopoly law, can impose a penalty of between 1 and 10 percent of a company’s previous year revenues. Qualcomm’s revenue for the fiscal year ended September 29 stood at around $12.3 billion in China, that is nearly half of its global sales, reported Reuters.

Lawyers say if the chip vendor fails to make concessions in talks with the NDRC the fine is likely to be extremely high.

The NDRC’s anti-price-fixing bureau head in December told the state media there was “substantial evidence” against Qualcomm in the antitrust probe.