Qualcomm suspected of chip monopoly, received the EU 1.2 billion US dollars fine

On Wednesday, US chip maker Qualcomm received a 997 million euros ($1.23 billion) large fine from the European Union. After the news came out, Qualcomm shares fell 1.35% in midday trading to $67.42.

Qualcomm Receives US$1.2 Billion U.S. Fine: "Bundle" Apple Chips Send High Rebate

It is reported that in order to ensure that the iPhone and iPad only use its chips, a GM agreement in 2011 "bundled" Apple, the agreement said that if Apple as an exclusive chip supplier, will be able to get "high" payments and rebates .

Apple had hoped to abandon Qualcomm's move to Microsoft (some of the Intel's modems will be used on the iPhone 7 series from around 2016), but will expire with the Qualcomm agreement in September 2016. At present, the contract signed with Apple is no longer in force, and Qualcomm faces fierce competition from Intel, Microsoft and other competitors.

Do not recognize the monopoly "bundle" Qualcomm said will appeal immediately

For this decision of the European Union, Qualcomm expressed its strong opposition and made an immediate appeal.

The European Commission stated that it initiated investigations since 2015, including the harm that competition and innovation caused by Qualcomm's non-compliance operations between 2011 and 2016, and said that the investigation has considered Qualcomm’s dominant market position in LTE baseband chipsets. . The committee said that this fine accounted for 4.9% of Qualcomm’s turnover in 2017.

Qualcomm needs to issue a fine before the appeal, and this may lead to an increase in expenses this quarter. Last year, Qualcomm was fined $ 774 million due to unfair patent licensing, and was fined by China's Taiwanese regulatory authorities, plus fines from mainland China and South Korea, as much as $ 2 billion.

Increase Broadcom's hostile takeover odds

According to related reports, the European Union’s decision will make Qualcomm more vulnerable to a 103 billion-dollar hostile takeover bid from chip maker Broadcom, which said that if the acquisition succeeds, it will quell disputes with Apple.

Qualcomm Receives US$1.2 Billion U.S. Fine: "Bundle" Apple Chips Send High Rebate

Not long ago, the European Union had just passed Qualcomm's $38 billion acquisition of NXP Semiconductors. The deal is subject to Chinese approval and some investors want higher prices.

In fact, all major trade committees are keeping an eye on Qualcomm. The EU had previously issued two "objection statements" to Qualcomm - if Qualcomm was found to have violated the EU's anti-monopoly law, it may face a fine equal to 10% of its global annual income and be required to adjust its business practices. At the beginning of last year, the US Federal Trade Commission (FTC) also accused Qualcomm of refusing to authorize standard competitor patents to some competitors and reached an exclusive agreement with Apple.

The good news is that some Chinese mobile phone manufacturers do not want Broadcom to acquire Qualcomm, and they are worried that the number of variables will increase and the price of future products will increase. At the Qualcomm China Technology and Cooperation Summit, the "half of the country" of China's mobile phone manufacturers all had Qualcomm's platform, claiming that hostile takeovers were unfavorable innovations in the interest of capital. Oppo, Vivo, and Xiaomi are all important customers of Qualcomm. Qualcomm's total wafer shipments to these three companies are almost twice that of Apple.

The relationship between Apple and Qualcomm is subtle

Vestager, chairman of the European Union’s antitrust agency, said in a press conference that for Apple, this will have no effect.

What could not be avoided is that because of this fine, Apple and Qualcomm were caught in the legal dispute of Qualcomm's commercial practice. Qualcomm started a lawsuit a year ago and Apple proposed that Qualcomm should pay up to 1 billion US dollars in patent licensing fees.

Such a ruling would provide Apple with a legal endorsement because Apple is now suing Qualcomm on a global scale. From Beijing to California, Apple sued Qualcomm’s “exclusive policies and excessive copyright fees”, which caused Apple to spend billions of dollars more in the past few years.

Compared to Qualcomm, the previous fine for Intel chips and Google search service monopoly was even more serious. In 2009, Intel was accused of “bribing” computer makers to ensure that most of the chips were purchased from it and was later issued a one-cent-a-day fine by the European Union. Google, on the other hand, was given a €2.4 billion fine last year for "cheat" on search engine services.

According to informed sources, the EU antitrust agency expects to reach an agreement with Qualcomm in the coming months. Another case involves British telephone software maker ICera, which was later acquired by Nvidia Corp. The EU suspects that Qualcomm will be between 2009 and 2011. The baseband chipsets are sold to two customers at a lower cost price, with the goal of forcing (competitors) Icera to exit the market.

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