Record fine upheld against Qualcomm

SEOUL: A South Korean court yesterday upheld a record US$873 million (RM3.64 billion) fine against US chip giant Qualcomm for unfair business practices related to patent licensing and modem chip sales, rejecting the company’s appeal against the penalty.

The ruling is a setback for Qualcomm as it battles customers over royalties and antitrust violations around the world, including an ongoing case brought by the US Federal Trade Commission.

Seoul High Court Judge Noh Tae-ak rejected the company’s appeal against the penalty imposed by the Korea Fair Trade Commission (KFTC) in 2016 saying Qualcomm had abused its dominant market position.

“The defendant exerted a significant influence over mobile phone manufacturers either through unfair relationships or making them depend on the defendant’s supplies of modem chipsets,” Noh said in his ruling.

The court, however, dismissed the regulator’s claims that Qualcomm had disadvantaged smartphone makers by signing “comprehensive” licensing deals, opening the door for the company to continue taking a cut of the price of the phone as a licence fee.

It was not immediately clear whether Qualcomm or the KFTC would appeal.

Qualcomm is the world’s biggest supplier of mobile phone chips and derives most of its profits from a business segment that invents technologies and licenses them.

The company forecasts between US$1.3 billion and US$1.5 billion in revenue for that segment for its fiscal first quarter, above analyst expectations, according to IBES data from Refinitiv. Qualcomm’s chips are essential components in many mobile devices and it is a top supplier to South Korean smartphone makers Samsung Electronics and LG Electronics , as well as Apple Inc. – Reuters