South Korean government has recently fined American semiconductor and telecommunications company, Qualcomm, for $854 million (1.03 trillion won) over allegations that the tech company has abused its market presence in wireless chips in South Korea, with its Snapdragon chips, and that it has enforced excessive licensing fees for the smartphone makers.
According to the smartphone manufacturers in South Korea, Qualcomm has charged them excessively through calculating the required licensing fees based on the total cost of a handset, instead of the chipset cost alone that the smartphone companies actually use Qualcomm’s technology for.
The Korea Fair Trade Commission has conducted an investigation spanning for three years regarding the matter concerning how Qualcomm has breached the antitrust law in the country.
“Qualcomm has forced unilateral, unfair terms on licensing contracts without going through a fair calculation process. This would be our first ruling to correct Qualcomm’s unfair business model… to revive fair competition in the telecoms sector,” stated Shin Young-sun, a director at the KFTC.
Qualcomm has reportedly been limiting the access of its patents to competing companies in the region.
In addition to that, the KFTC has also stated that Qualcomm has allegedly forced an unfair license agreement among its smartphone manufacturers. The telecom company has refused to supply the manufacturers with the necessary chips that they need when they disagreed with Qualcomm’s demands.
In response to the fine given by South Korea, Qualcomm replied saying that the violation imposed upon them was “unprecedented and insupportable”; the company claimed that the finding by the KFTC was flawed. According to Qualcomm, they will appeal the decision in South Korea’s Seoul High Court and would request to scale down the fine that was given.
So far, this was been the highest fine that the KFTC has ever given to any company.
Among Qualcomm’s clients are LG Electronics and Samsung Electronics. These two companies receive their supply of semiconductors from the American company in order to provide their customers the high-end handsets with the processing power and speedy date connections such as the 3G and 4G networks.
On the most recent financial year report, Qualcomm was able to generate $6.5 billion in profit from selling the right to use the technology that is necessary to the development of all modern phone systems.
To date, Qualcomm’s biggest competitions in the modem and mobile chipset market is Intel and Mediatek. However, Qualcomm’s modem technology is said to be far superior to its competitors.
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