Qualcomm to pay $1 billion to settle China antitrust dispute

About a week ago, we reported that China was beginning to impose greater restrictions on companies like Qualcomm and other American manufacturers. The Chinese government has been meeting with Qualcomm to settle antitrust claims in hopes to slow down the US-based chipmaker in favor of state-run companies such as Semiconductor Manufacturing International Corp. and Spreadtrum Communications.

The settlement has finally been reached, according to Reuters, to the tune of $1 billion. This fine is the result of a 14-month government antitrust investigation, accusing Qualcomm of imposing anti-competitive licensing practices. Apparently, these conversations have been intensifying over the past weeks, resulting in talks between senior executives at Qualcomm and National Development and Reform Commission (NDRC) officials last Friday. The deal may also include Qualcomm lowering its royalty fees by about a third on patents used in the country. These lowered royalty rates could be announced as soon as Monday.

The $1 billion settlement may already seem like a lot of money, but to top it off, the chipmaker’s fine will be the largest paid by any company in China. Qualcomm has also agreed to alter its licensing practices, although they aren’t expected to alter the company’s business model. This is particularly detrimental to Qualcomm, as the company made roughly half of its global revenue of $26.5 billion in China alone last year.