Qualcomm has been hit with a almost $774 million fine by Taiwan's Fair Trade Commission, which said today that the chip maker abused its monopoly over smartphone modems to squeeze higher licensing fees and better terms out of its customers.
The South Korean Fair Trade Commission said Qualcomm coerced its customers into signing patent license contracts when selling its chips used in mobile phones in the country.
The Commission said in a Chinese-language statement that Qualcomm had a monopoly over the chip market for several so-called modem technologies, which provide wireless data connectivity for mobile phones, and refused to license its technology to other industry players. It'll now be required to end those practices and parts of unfavorable deals it forged with other companies.
Qualcomm, not surprisingly, disagrees with the decision.
It'll take weeks before the court issues a final word on the matter, and according to Qualcomm, the fine that it's charged with has "no rational relationship to the amount of Qualcomm's revenues or activities in Taiwan".
At this point, things aren't looking great for Qualcomm. But China's National Development and Reform Commission left intact Qualcomm's long-standing business model of charging patent royalties for its cellular technology based on a percentage of the total price of the smartphone. "Qualcomm holds big number of standard essential patents in CDMA, WCDMA and LTE segments and is the dominant provider of CDMA, WCDMA and LTE baseband chips", the FTC said.
The Taiwanese regulator said Qualcomm has monopoly market status over key mobile phone standards and by not providing products to clients who don't agree with its conditions, the US company is violating local laws.
The U.S. Federal Trade Commission is also suing Qualcomm over its licensing practices. Qualcomm filed a separate civil lawsuit accusing Apple of infringing the patents at issue in that action.
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