Qualcomm Fined $853 Million by South Korean Antitrust Agency

Qualcomm Fined $853 Million by South Korean Antitrust Agency
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South Korea’s antitrust regulator slapped a record $853 million fine on Qualcomm for violating antitrust laws, the latest in a string of government actions that threaten the U.S. chipmaker’s most profitable business, according to Bloomberg. The South Korean Fair Trade Commission said that the company licensed its key patents only to mobile-phone makers and didn’t properly negotiate the terms of its licenses. The agency also said Qualcomm coerced its customers into signing patent license contracts when selling its chips used in mobile phones in the country, and it didn’t fairly pay for the use of patents held by other makers.

The decision from the home country of Samsung adds to investor concern that the chipmaker, which is also the subject of investigations in the U.S. and Europe, may struggle to defend its lucrative licensing business. Qualcomm gets the majority of profit, $6.5 billion in its most recent financial year, from selling the right to use technology that’s fundamental to all modern phone systems. Qualcomm, calling the decision “unprecedented and insupportable,“ said it will appeal the decision in Seoul’s High Court.

For Samsung, the world’s biggest phone maker, and LG, the ruling opens up the possibility they may be able to pay lower rates to Qualcomm. When Qualcomm settled an investigation by Chinese regulators last year, it accepted a lower rate charged on phones sold in that country. Samsung is Qualcomm’s second-largest customer, accounting for about 11 percent of its sales, according to Bloomberg’s supply chain analysis. Resolving patent wrangles remains key to shoring up Qualcomm’s business.