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Companies

Qualcomm settles $774m antitrust dispute in Taiwan

Chipmaker to increase investments in Taiwan as part of settlement

     © Reuters

LOS ANGELES/TAIPEI (Financial Times) -- Qualcomm has settled its antitrust dispute in Taiwan, resolving one of several legal battles the mobile chipmaker is facing around the world.

Qualcomm said the agreement allows it to continue setting licensing terms based on the price of an entire device using its technology and intellectual property, rather than just components such as modems.

Those licensing practices have become a key point of contention with litigants including Apple and the US Federal Trade Commission.

Last October, the Taiwan Fair Trade Commission fined Qualcomm around $774m, alleging that it had abused its dominant position in providing chips for wireless data connections in mobile phones. Qualcomm had denied the allegations and launched an appeal.

On Friday morning in Taiwan, the TFTC and Qualcomm said they had resolved their dispute and reduced the initial fine to NT$2.73bn ($93m), which has already been paid.

However, the Taiwanese regulator will now monitor Qualcomm's negotiations with licensees to ensure "fairness" for the next five years. Over the same period, the San Diego-based chipmaker must also increase its commercial investments in Taiwan, including collaborating on 5G and opening a new manufacturing and engineering centre there. No figures were immediately available for the cost of that investment.

Among the deal's other clauses, the company has promised to no longer enter into discount agreements in exchange for exclusivity clauses in its supply contracts, the Taiwanese regulator said. Qualcomm has also agreed to enter into renegotiations in good faith if a Taiwanese licensee believes it has been hit with an unfair agreement, and it ensures the company will not terminate or threaten to terminate chip supply during any such negotiations.

The settlement does not end Qualcomm's ongoing litigation with Taiwan-based Foxconn, one of a group of Apple contract manufacturers that has been pulled into the two companies' legal dispute.

Nonetheless, despite the lengthy regulatory oversight required, Qualcomm presented the settlement as a validation of its existing business model.

"We are pleased to have reached a mutually beneficial resolution with the TFTC that puts the litigation behind us," said Alex Rogers, president of Qualcomm's licensing unit.

"This settlement directly addresses concerns raised by the TFTC, regardless of disputed positions, and builds on our foundation of collaborative, long-term business relationships in Taiwan. We are happy to reaffirm our commitment to licensing our valuable intellectual property under principles of fairness and good faith."

In Taiwan, the decision to settle came after the regulator faced "enormous pressure" from local stakeholders including the Ministry of Economic Affairs and the country's top research institute, with whom the chipmaker had paused research programmes, said Ross Feingold, a Taipei-based adviser with consulting group DC International Advisory.

"It appears the TFTC sought a face-saving solution to a dispute that was a domestic political problem as much as it was a fair trade problem and entered into this kind of settlement for the first time in its history," Mr Feingold said, noting also the regulator may have feared the Trump administration might have more vocally come to Qualcomm's defence, exacerbating the dispute.

 

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