High royalties key reason behind Qualcomm fine: NDRC

Updated: 2015-02-10 11:48

By LanLan and Gao Yuan(chinadaily.com.cn)

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High royalties key reason behind Qualcomm fine: NDRC

The sign hanging outside the Qualcomm booth is seen at the International Consumer Electronics show (CES) in Las Vegas, Nevada January 6, 2015. [Photo/Agencies]

The "unfair" and "excessively high" royalties Qualcomm Inc collected from Chinese smartphone makers were the key factors that led to the historical fine, the National Development and Reform Commission said on Tuesday.

"Qualcomm refused to provide patent list to its customers in China and out-of-date patents were included in the licensing package and charged," the NDRC said in a statement.

Other major breaches that violated the Chinese Anti-Monopoly Law include product bundling and adding unreasonable conditions in the sale of baseband chips, the NDRC said.

Nicole Peng, research director at Canalys China, said the rectification plan will have a "relatively small" impact on Qualcomm's revenue in China.

Qualcomm will change its patent fee on two device categories- 3G and 4G devices that don't have WCDMA and CDMA, according to a company statement.

"We expect these two categories in total to account for less than 40 percent of the overall LTE shipments in 2015 and even less in the coming years," said Peng.

In addition, as both categories are mainly lower-end products, it will not have significant impact on the total revenue, she added.

The United States chip giant was fined 6.08 billion yuan ($975 million) according to the Anti-Monopoly Law, the amount accounts for 8 percent of the company's 2013 revenue in China.

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