Chinese Government Wants Qualcomm to Lower Down its Licensing Fees For Domestic Smartphone Makers

Published Date : Dec 24, 2014

The Chinese market wants Qualcomm Inc. (QCOM) to make do with lower payments for technology used by Chinese smartphone manufacturers, sources close to the matter stated. If imbibed upon seriously, the decision could hurt the chief source of profits of the chipmaker.

An agreement will end Chinese government’s 13-month long anti-monopoly probe for Qualcomm. Negotiations are in continuation with the country’s National Development and Reform Commission (NDRC), and chances are ripe that last minute changes will happen. It is also being said that the Chinese government may ask Qualcomm to unbundle its license agreements.

The potential concessions asked by the Chinese government specify the high price the San Diego-based company may have to pay for accessing the world’s largest smartphone market where sales have already been negatively affected due to the probe that some smartphone makers avoid paying the licensing fee.

Many other companies in the technology sector, such as Symantec Corp. and Microsoft Corp. have been affected by Chinese government’s tactics that have fueled concerns about the country following a mercantilist policy to boost growth of its own companies. 

Chinese Premier Li Keqiang tried to counter these concerns when he pledged in September that he will try to make China more open to foreign investments and product innovations.

Analysts state that Qualcomm has collected more than US$30 billion worth revenues from licensing fees in the past five years. Meanwhile, currently, Qualcomm is trying to push hard against China’s attempts to lower down the licensing fees because of concerns that changes in licensing fees in the Chinese market will lead to changes in other countries as well.