Qualcomm Establishes Globalization Centre in China to Help Smartphone Makers with Exports, Hopes to Alleviate Damage Done by Antitrust Investigation
In the backdrop of its antitrust case, U.S.-based chipmaker Qualcomm Inc. is now striving to mend its standing in the Chinese electronics market. To this end, the company has announced the launch of a unit dedicated to assisting Chinese smartphone manufacturers in augmenting their exports. The move comes as a part Qualcomm’s efforts to establish itself as a valuable player in the Chinese electronics industry, especially in light of China cutting down on its reliance on foreign technology houses and chip manufacturers.
Analysts note that as a company that earns about 50% of all revenues from the Chinese market, Qualcomm is trying its best to maintain—if not strengthen—its footing in the Asian economy. Qualcomm currently ranks as the largest chip manufacturer for smartphones. About two-thirds of the company’s profits can be traced back to its wireless patents licensing business. However, it was this very business model that came under intense scrutiny from Chinese regulators. What followed was an investigation stretching on for 15 months. According to market watchers, this antitrust investigation was a result of complaints from a number of leading Chinese smartphone manufacturers who were ostensibly unhappy over Qualcomm’s technology pricing.
The San-Diego-based company, however, refuted these government findings, which stated that the company violated antimonopoly laws in China. Qualcomm also followed this up with an announcement that it was offering a settlement comprising US$975 million in antitrust fine, as well as a slash in royalty rates on mobile handsets it was selling in China. According to the company, the fine heavily dented the company’s fiscal second-quarter profit, and reported a 46% in the same.
The CEO of Qualcomm, Steve Mollenkopf, said last week that since the company had announced the deal with the Chinese government, it had seen more customers willing to sign up licensing agreements. At the same time, Qualcomm needs to up sales to smartphone makers as well, which is why it is now establishing a ‘globalization office’ in the Chinese city of Shenzhen.
Whether or not this strategy works for Qualcomm will only be evident in the coming months.