Qualcomm pays out $975m to Chinese government in antitrust settlement

Fine is largest in China's corporate history - but it could've been worse

Semiconductor manufacturer Qualcomm has agreed to pay the Chinese government a fine of $975m (£640m) to settle an antitrust investigation that has so far lasted for 14 months.

The chip maker - whose devices are used in products sold by companies such as HTC, LG, Sharp and Nokia - has also been requested to lower the royalty rates it charges on patents used in China, with the intended effect that homegrown companies, such as Huawei and Xiaomi, will benefit.

Qualcomm is also involved in ongoing antitrust and monopoly investigations in Europe and the US, but when asked whether the result in China could affect the other probes, company president Derek Aberle said that while Qualcomm "respects [China's] authority", the company does not "believe it's likely that other agencies will necessarily meet similar conclusions".

The company went on to comment that the settlement with China will be a major relief for investors, and this was borne out by an almost instant uptick of 2.8 per cent in share value in after-hours trading yesterday, pushing the value to $69.

China's fine could have been higher - the $975m equating to only eight per cent of Qualcomm's 2013 sales figure in China, when Chinese law would technically have allowed it to levy a fine of up to 10 per cent.

National Development and Reform Commission (NDRC) chief Xu Kunlin put this down to Qualcomm's high level of cooperation with investigators, coupled with a desire, said Xu, to "restore orderly, free-market competition".

"Qualcomm's practices had stifled innovation," he said, adding that "issuing the fine was not our primary purpose".

Qualcomm will in future issue licences for its current 3G and 4G patents separately to its other patents - reducing the need for device makers to buy bundles of patents - as well as calculating its royalties based only on 65 per cent of a device's selling price, rather than the previous 100 per cent.