China Fines Qualcomm $975 Million for Anti-trust Violations
by Ryan Smith on February 9, 2015 8:15 PM EST- Posted in
- Smartphones
- Qualcomm
- Mobile
- Legal
Word comes out of China this evening that an ongoing anti-trust investigation into Qualcomm has come to an end. Ruling against Qualcomm, China’s National Development and Reform Commission has found Qualcomm guilty of violating Chinese anti-trust laws, and has fined the company $975 million alongside imposing new licensing rules on the company.
At the crux of the matter has been Qualcomm’s patent licensing program in China, portions of which the NDRC has asserted violate Chinese law. As Qualcomm owns a number of standards-essential 3G and 4G patents, Chinese firms must in turn license these patents for their phones and cellular-enabled tablets. To that end, Qualcomm’s bundling of various patents has been under extreme scrutiny, particularly the bundling of other patents with the standards-essential 3G and 4G patents, a process that would force Chinese manufacturers into paying more to license additional patents they did not need.
As a result of the NDRC’s ruling, Qualcomm is being fined 6.088 billion yuan ($975 Million) and is having new royalty rules imposed. Resolving the immediate problems that lead to the ruling, Qualcomm will now be required to offer the standards-essential 3G and 4G patents separately, putting an end to the bundling practice. Meanwhile new royalty rates and procedures are also being set; Qualcomm’s rates in China will be similar to the rest of the world, and the rates will be calculated against 65% of the total value of the device.
Overall the $975 million fine is the largest in Chinese history, and while it will put a dent into the company’s pockets in the short-run, it is still less than half of the company’s $1.97B net income for their most recent quarter. More significant is the ongoing revenue impact from the reduced licensing revenue, which has already caused the company to reduce their 2015 earnings forecasts by $0.58 per share. More than half of Qualcomm’s net income comes from royalties from patent licensing, so anything that impacts their patent licensing business has a significant impact on their bottom line.
Finally, Qualcomm will not be appealing this fine, having entered into it as part of an agreement with the NDRC to end the anti-trust investigation.
Source: Bloomberg
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ddriver - Monday, February 9, 2015 - link
Do MS next! Intel too, for bundling integrated graphics in high end products everyone on Earth would combine with a high end discrete GPU.Impulses - Monday, February 9, 2015 - link
Pretty sure you're free to buy your CPU from anyone else...ddriver - Monday, February 9, 2015 - link
Really? Does anyone besides Intel manufacture high performance CPUs? That die space could have easily be saved to make the chip 30% cheaper, or add another extra 2 CPU cores, both would be better than a weak GPU that will sit idle for the sole purpose of boosting Intel's GPU market numbers.dstarr3 - Monday, February 9, 2015 - link
That's a pretty dumb comment.ddriver - Tuesday, February 10, 2015 - link
Yeah, not like you, making such an excellently valid point LOL /spewterrock - Monday, February 9, 2015 - link
You realize they sell desktop processors that don't have integrated graphics*, right? Look up the X79 and X99 chipsets.iniudan - Tuesday, February 10, 2015 - link
Would be better to point to the cpu socket LGA2011 and LGA2011-v3 then the chipset of the motherboard that will have those socket.As CPU spec chart usually don't list the motherboard chipset.
ddriver - Tuesday, February 10, 2015 - link
That is true, but then you have to pay a price premium, so the lack of the unneeded GPU doesn't really benefit the purchase value. Who in this world buys an i7 to use with the integrated graphics? I certainly haven't seen a case, integrated graphics makes sense in value to low midrange, everything over that is just intel wasting silicon to boost its GPU marketshare stats. And it is not like the GPU is some miniscule chunk of the die, so it would be the same with or without it.The same way you are also free to use satphones instead of qualcomm's 3g/4g, and it will also come at a price premium. Nobody is forcing the industry to use qualcomm's IP right? No more than nobody is forcing me to buy Intel chips, but in reality I seek best value for my money as does the communication industry, that's why it is obligated to pay qualcomm royalties for its IP bundles and that's why I am obligated to buy Intel's products which are bundled with a GPU I don't need just as those firms don't need the extra patents qualcomm bundles.
The situation is pretty much identical, a company abuses its marketing position to cram extra stuff down its consumers' throats they don't really need but have to pay for, it happens, even if some people apparently don't have the capacity to realize it.
Sushisamurai - Tuesday, February 10, 2015 - link
You bring up a lot of good points, especially with the Intel argument and the last bit about leveraging marketing position (market share). However, until i had a dedicated GPU, i did make use of my i5-4K processor's integrated GPU for gaming, so that's one case.Historically, Intel as a corporation (not non-profit) has margins of 60-65% on their chips, contrasted to AMD's 30-35% - rightfully so, corporations' main goals are to make money; benefit to the consumer comes afterwards.
As nice as Intel would be to make a specialized 4 core i-7 without an iGPU, I believe they chose not to not only for your reasons described above, but also because of logistics. To develop, manufacture, distribute, and market this new "i7" with the same current socket; the extra costs could very well be implemented into the price of this new "i7", coupled with the fact the market may have a decreased demand for just a CPU without iGPU, the cost to consumer while maintaining that 65% margin may be the same as an i7 with a iGPU. The extra costs of the new i7 would be shifted to consumers, as well as increasing the cost of the i7's /w iGPU's, and increasing the consumer price. The costs will shift to somewhere, and most likely to consumer as intel has historically liked their 65% margins. I would. If the choice were to have two i7 types associated with increases in price of all their processor ranges, or i7 with integrated and cheaper prices, I would probably choose the integrated option.
ddriver - Tuesday, February 10, 2015 - link
You make it sound like they use the same stencils to make everything with integrated GPU. i3, i5, i7, even their different variations have different layout, and reusing those somehow saves on development cost.They could just as easily simply not have iGPU on i7 and that would actually save them a lot of money, allow them to sell the chips cheaper while still hitting their desired margins.
To be honest, iGPU in high end chips ONLY makes sense in server chips, were you only need the CPU power and barely enough GPU to manage it though a UI. But workstations, gaming - those MANDATE you get a good dedicated GPU, making the iGPU a waste of die space. And yet server chips, which could use a mediocre iGPU don't come with any. Probably because there are plenty multisocket systems, on which the "extra iGPUs" would be redundant, but then again, so is the iGPU in i7, and unlike the "desktop enthusiast" the server chips have tremendously higher margins, so the redundancy might actually be "more justified".
And getting back to choice and what would consumers prefer, I am pretty sure at least 99% of the people who buy i7 would prefer to get 2 extra cores at the same price and power envelope than the iGPU.