Chinese regulators said that Qualcomm (NASDAQ:QCOM) is willing to make changes to improve its pricing practices in the country, which could lead to the end of an anti-trust probe against the chipset giant.
China's National Development and Reform Commission (NDRC), the country's economic planning body, said in a statement that officials had met on Thursday with a group of executives from Qualcomm, including President Derek Aberle, and that Qualcomm had "expressed its willingness to make improvements."
"Qualcomm executives discussed with NDRC officials several topics in an effort to reach a comprehensive resolution," the company said in a brief statement sent to several news outlets, including Reuters. "We are continuing to cooperate with NDRC and cannot comment further."
The NRDC has been investigating Qualcomm's local subsidiary for months and in February said there were suspicions that the company was overcharging companies that license its technologies and abusing its market position in wireless. The allegations carry the possibility of record fines of more than $1 billion. Qualcomm has said it expects to take some financial loss as a result of the probe. Further, Aberle has said the investigation is making it harder to negotiate new LTE license agreements with device makers in China.
That has made life for Qualcomm difficult in the world's largest smartphone market, just as LTE technology deployments are ramping up and carriers are starting to sell more and more LTE devices.
However, despite the difficulties, Cristiano Amon, co-president of the Qualcomm CDMA Technologies division, told CNET in an interview that the company is in a strong position to capitalize on the LTE rollouts.
"We're very, very excited about the traction in China," he said, later adding, "We expect that as the market in China becomes more sophisticated ... we're actually going to be better positioned over time."
Qualcomm's licensing business delivers less revenue than its chipset sales but makes up most of Qualcomm's operating profits, CNET noted, and Qualcomm's licensing practices are at the heart of the probe. The company said last month said it's in a dispute with an unnamed licensee in China and believes some Chinese licensees are underreporting their sales of licensed products, the report noted.
Qualcomm is by far the largest player in the application processor and cellular baseband markets, but faces challenges in China and other emerging markets from companies like MediaTek and Marvell that are targeting entry-level and mid-tier smartphones.
- see this Reuters article
- see this WSJ article (sub. req.)
- see this CNET article
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