Qualcomm said in a statement that it will be fighting allegations against its patent licensing practices.
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The chip giant said it had received a case examiner’s report (ER) from the Korea Fair Trade Commission (FTC), which is the start of an antitrust investigation, and will also allow Qualcomm’s to mount its defence process.
The issues in the investigation include the allegation that the company’s practice of licensing patents only at the device level and requiring that its chip customers be licensed to its intellectual property violate South Korean competition law. The United States company’s NASDAQ share price plunged by 9.4% to hit its lowest close in four years after the news emerged yesterday. “Device level licensing is the worldwide industry norm, and Korean companies have long enjoyed the benefits and protections of access to our patents, which cover essentially the entire device”.
“We intend to vigorously defend ourselves at the Commission hearings and remain hopeful that the Commission will reject the conclusions of the Examiners Report”.
KFTC staff members alleged that those practices are illegal, Qualcomm said.
South Korea is the latest of many jurisdictions that have pursued Qualcomm.
Qualcomm’s technology licensing practices have come under fire from another anti-monopoly regulator in Asia – this time in South Korea. The chipmaker has faced regulatory challenges across the globe and earlier this year paid a fine and agreed to charge a smaller percentage on locally sold handsets in China. The USA company’s most recent quarterly results suggest that it is still struggling to retrieve all of the money it claims it is owed, though signing new licensing deals with major manufacturers TCL and ZTE is a positive sign.
It would be hard for Qualcomm to justify the rates of the its royalties if it were to untether them from overall device costs. The company has been reviewing strategic options that include splitting its chip and licensing businesses in the wake of pressure from activist investor Jana Partners LLC.
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Qualcomm is also under investigation by the European Commission, which is investigating whether Qualcomm has engaged in “tied selling” of 3G and 4G mode chips as well as whether it has engaged in “predatory pricing”.
