Qualcomm Reaches Settlement With Taiwan to Slash Antitrust Fines

A Qualcomm Inc. baseband modem integrated circuit (IC) chip, center, of an Apple Inc. iPhone 6 smartphone is seen in an arranged photograph in Bangkok, Thailand, on Saturday, Feb. 3, 2018. Apple Chief Executive Officer Tim Cook told shareholders on Feb. 13 at the company’s annual meeting to expect higher dividends and stressed that succession planning is a priority. Photographer: Brent Lewin/Bloomberg

Qualcomm Inc., the smartphone-chipmaker fighting a series of regulatory actions and lawsuits threatening its most profitable business, has reached a settlement with Taiwan’s antitrust regulators that reverses most of a $773 million fine levied last year.

As part of the agreement announced Friday by the Fair Trade Commission, the company will stop paying fines and retain the right to charge manufacturers for royalties on its technology. The Taiwanese agency however will keep NT$2.73 billion ($89 million) that Qualcomm’s already paid, the FTC. The company agreed to ensure fair negotiations with local licensees, and will support research and commercial projects in Taiwan, including collaborating on the development of fifth-generation wireless technologies, Qualcomm said in a separate statement.

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The Taiwanese agreement came after Qualcomm outlined a five-year investment plan and pledged to set up an operations center there, regulators said Friday. It reverses one of a number of actions taken against Qualcomm in recent years that investors worried would destroy its patent-licensing business, a unit that generates the majority of the company’s profit. Qualcomm has argued that such moves are part of a global push by Apple Inc. to elicit government support for its legal fight with the chipmaker. The iPhone maker is suing Qualcomm for antitrust violations, alleging the San Diego-based company unfairly leverages its market position in modem chips to help its licensing business, and has said regulatory actions worldwide show its claims are justified.

Qualcomm still faces multiple lawsuits brought by Apple, as well as actions and investigations in South Korea, the European Union and the U.S. The flood of legal challenges has weighed on the company’s stock price and made it a target for a failed hostile takeover bid by rival Broadcom Inc.

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Chief Executive Officer Steve Mollenkopf has said Qualcomm will maintain its record of prevailing in court, and contends that the bitter fight with Apple is a commercial dispute that will be resolved when one side gains leverage in trials that are underway.

In an October decision , Taiwan’s antitrust agency said Qualcomm had monopoly market status over key mobile phone standards and was violating local laws by not providing products to clients who didn’t agree with its conditions. Besides the fine, the Fair Trade Commission told Qualcomm at the time to remove previously signed deals that forced competitors to provide price, customer names, shipment, model name and other sensitive information. Qualcomm appealed the decision.

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Most of Qualcomm’s revenue comes from its main business of selling chips that connect smartphones to cellular networks. The company gets the bulk of its profit, though, from charging royalties on patents it owns that cover the fundamentals of all modern high-speed data phone systems.

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