Qualcomm has Chinese manufacturers in its crosshairs after accusing certain firms of doctoring device shipments to reduce the patent royalty fees owed to the chipmaker.
The US company thinks Chinese companies aren’t reporting the total amount of sales of 3G and 4G devices thus causing Qualcomm problems that saw its share price take a dive.
"We believe we will find that they are only reporting something less than 100 per cent of their sales, and hoping they are going to be able to get away with it,” explained Derek Aberle, Qualcomm president, according to the BBC.
Almost half of Qualcomm’s 2013 sales were made in China and the company’s share price dropped by seven per cent on the Nasdaq earlier today, and the latest news compounds earlier reports that the company is under investigation over in China for abusing its monopoly.
The state-run Securities Times newspaper reports the National Development and Reform Commission [NDRC] has already decided Qualcomm runs a monopoly in the country. Though this doesn’t actually break any rules in China and the NDRC has to rule that Qualcomm has broken the rules to impose a penalty, as having a monopoly is not prohibited in China.
The NDRC investigation is looking at claims that Qualcomm charges higher prices to Chinese companies than elsewhere and if it finds the company has abused its position, then it can fine it up to 10 per cent of its local revenue for the past financial year.
"We have met with and are continuing to fully co-operate with the NDRC, as it conducts its investigation, but the timing and outcome of any resolution remains uncertain, as does the impact on our future business in China,” Aberle admitted.
If China does choose to fine Qualcomm then it could run as high as $1 billion and it is rumoured that the investigation centres on Chinese government attempts to lower domestic costs in advance of 4G mobile networks opening up next year.