Qualcomm Staring Down Barrel Of $1.6 Billion Antitrust Fine In China

Following a 14-month investigation into potential antitrust violations, Chinese regulators could fine U.S. chipmaker Qualcomm over 10 billion yuan, or $1.6 billion in U.S. currency. It would rank as China's largest antitrust penalty ever, though regulators and Qualcomm have been in discussions the past week and may reach a deal that would reduce the fine to $1 billion.

According to Reuters, part of the deal includes Qualcomm taking a lower royalty rate on patents used in China -- it would reduce the amount by about a third of what it current takes. Qualcomm would also agree to change its licensing practices, though no specifics have been reported. Those details could be revealed later today when a formal announcement is expected to be made.


Even after reducing the penalty to $1 billion, it would still be the largest amount any company has ever paid in China. Nevertheless, it's not a market Qualcomm can ignore -- the chipmaker earned almost half of its global revenue of $26.5 billion in China last year. Much of its profit came from licensing.

China's relationship with U.S. businesses has been especially contentious since former NSA subcontractor Eric Snowden released top secret information about the U.S. government's PRISM program. At the same time, reaching a settlement with China's National Development and Reform Commission (NDRC) would be viewed as progress, at least to an extent. That's because the antitrust agency has built up a reputation of using intimidation tactics under its boss, Xu Kunlin.