bit-tech.net

Qualcomm hit with massive fine

Qualcomm hit with massive fine

Qualcomm's profits will likely take a hit next quarter unless it successfully appeals the record fine handed out by the Korean Fair Trade Commission.

Communications giant Qualcomm has been hit with a massive ₩260 billion fine – that's £126.4 million – by the Fair Trade Commission in South Korea.

As reported by Engadget, the company – which is best known for manufacturing the radio chips used in many mobile handsets – has been handed the fine after investigators uncovered evidence that companies agreeing to do business exclusively with Qualcomm were being offered substantially better deals on licensing CDMA technology than those who like to keep their options open and deal with other companies as well. The Commission has also ordered the company to stop charging royalties on expired or obsolete patents.

The fine is the largest penalty ever handed out by the South Korean Fair Trade Commission, and could put a real dent in Qualcomm's operations over there: the company deals with Korean handset manufacturers Samsung and LG Electronics, and if it turns out that the contracts held between the companies are invalid Qualcomm could be losing more than just the fine. Even if the company carries on as normal, it's important that it placates the Commission: the fine represents a whopping 28 percent of the company's profits last quarter.

For its part, Qualcomm denies the claims and states it plans to appeal the fine. Further, Bloomberg reports the company's general counsel Donald Rosenberg as stating that, no matter what the outcome of the appeal, the company will “make sure we remain price-competitive” and not pass any lost revenue on to its customers.

The US-based company's legal woes are unlikely to be over any time soon, either: Qualcomm is also currently under investigation by the European Competition Commission over claims by handset manufacturer Nokia that it is charging too much to licence its patented technologies.

Is Qualcomm guilty of some sharp practice, or is it just good business sense to reward loyal customers with discounted deals? Share your thoughts over in the forums.

8 Comments

Discuss in the forums Reply
Goty 24th July 2009, 14:39 Quote
Hmm, cutting deals for exclusivity agreements? It seems like I've heard something about that from another tech giant recently.... Now who could that be?
Dreaming 24th July 2009, 16:12 Quote
Qualcomm? I seem to remember them. Ah yes, they licenced the MSM7200 chipset to HTC for use in the TyTN ii, but then said HTC would have to pay another several million after the deal was done to use the damn drivers. So the HTC TyTN ii has never had in it's history proper drivers to use 2d and 3d graphic acceleration that is inbuilt to the chipset.

This results in an experience from an originally £500 phone that is similar to first installing XP and having 16 colours at 640 x 480 resolution - wholly unpleasant.

I think this is a success for the consumer more than anything else, woo.
mrb_no1 24th July 2009, 18:12 Quote
£126.4 million represents 28% of the 'profits' last quater which in the grand scheme of things for them is naff all. What a joke, so if they paid straight away it would make the 3rd quarter results look bad which will have a knock on affect with stockholders and customers, plus lg and samsung might want to move away, but for dodgy dealing like this i'd expect a fine that will actually make them think o crap before doing it again. epic fail by the fair trade commission imo

peace

fatman
TheMusician 24th July 2009, 18:33 Quote
for some reason when I think of Qualcomm I think of Foxconn, which also may get in trouble for possible maltreatment of their workers in China- which i'm sure you guys've heard about.
LordPyrinc 25th July 2009, 07:44 Quote
It took me a moment to remember where I've seen the name Qualcomm. It's on the back of my Blackberry. Don't know if all of them have Qualcomm chips, but apparently mine does.

I'm not so sure why this is such a big deal though. If I I was providing another company with hardware and they agreed to use me as their exclusive provider, why shouldn't I cut them a good deal? I would get a steady flow of income from that customer and they would get a good discount. If another company says I will buy some hardware, but I will be shopping around with other suppliers, I wouldn't be able to count on a steady flow of income from them. So why not charge them more?
impar 25th July 2009, 13:02 Quote
Forum thread where?
yodasarmpit 25th July 2009, 13:11 Quote
With all these anti competition hearing, where do the likes of Apple, Palm, and Blackberry stand with their exclusive deals with O2 and Vodafone respectively.
cyrilthefish 27th July 2009, 14:07 Quote
Quote:
Originally Posted by Dreaming
Qualcomm? I seem to remember them. Ah yes, they licenced the MSM7200 chipset to HTC for use in the TyTN ii, but then said HTC would have to pay another several million after the deal was done to use the damn drivers. So the HTC TyTN ii has never had in it's history proper drivers to use 2d and 3d graphic acceleration that is inbuilt to the chipset.

This results in an experience from an originally £500 phone that is similar to first installing XP and having 16 colours at 640 x 480 resolution - wholly unpleasant.

I think this is a success for the consumer more than anything else, woo.
Is that what actually happened?

The general consensus on the forums i read was that it was HTC simply being cheap and not buying the driver.
Qualcomm doing the old 'bait and switch' tactic to get more money sounds feasible, but it's the first i've heard of it
Log in

You are not logged in, please login with your forum account below. If you don't already have an account please register to start contributing.



Discuss in the forums