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China’s top economic planning body has said the US firm is being investigated for overcharging and abusing its market position.
The National Development Reform Commission (NDRC) said probe into Qualcomm started last year on complaints from Chinese industrial associations and lawyers.
The NDRC said its preliminary investigation showed that to some extent, the accusations are well-founded but further investigation and analysis is needed.
These complaints accused Qualcomm of abusing its dominance in the wireless telecommunication copyright and cellphone chip markets. If verified, the tech firm could face charges of more than $1 billion.
“The case is just a routine part of our work to maintain market order, and no specific body is targeted,” the NDRC stressed when responding to media reports that the central government intended to break Qualcomm’s dominance of the 4G market.
Qualcomm is the world’s largest manufacturer of wireless telecommunication products, holding 40 per cent of the market in China and 30 per cent in the world.
Manufacturers using Qualcomm chips have been asked to pay exorbitant patent fees of up to six per cent of a phone price, over and above the cost on the chips themselves.
The China Communications Industry Association filed a report with the NDRC at the beginning of this year complaining about Qualcomm’s over-pricing, which they claim harms China’s mobile industry.
In 2009, South Korea fined Qualcomm around $252 million for abusing its market position.
In 2013, Qualcomm’s revenue rose 30 per cent to $24.87 billion, with $7.88 billion coming from patents.