Wireless chip vendor Qualcomm is facing an investigation by the China’s price regulator under the Chinese Anti-Monopoly Law.
Recently, Paul E Jacobs, chairman and CEO of Qualcomm said that the company is expected to post double-digit compound annual growth rates for both revenues and earnings per share over the next five years. One of the key markets for Qualcomm is China. Qualcomm’s revenue from China rose 54 percent to $12.3 billion this year, 49 percent of total revenue.
Two weeks ago, Cisco CEO John Chambers said it would face tough market conditions in China due to American administrations involvement in the spying initiatives.
Reuters on Monday reported that Qualcomm, the world’s biggest maker of cellphone chips, was not aware of any violation but would cooperate with the investigation by China’s National Development and Reform Commission (NDRC).
The NDRC did not say why Qualcomm was being investigated. However, Evercore Partners analyst Mark McKechnie said the investigation seemed to be part of a wider probe into the industry and not specific to the company.
Qualcomm also sells chips and licenses technology to Chinese phone makers such as Huawei, ZTE, etc. looking to export their devices into overseas markets.
China’s state media quoted on Sunday an NDRC official saying the country will focus antitrust investigations on six industries, ranging from technology to medicine.
In the last few months, organizations affiliated to the Chinese government spent nearly $3 billion to buy Chinese mobile chipmakers Spreadtrum Communications and RDA Microelectronics.
The NDRC is China’s top economic planning body and regulates prices. It has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
Strong presence in China is important for Qualcomm as it is heavily relying on China Mobile and other telecom operators to supply 3G and 4G chips. China Mobile, the largest telecom operator in the world – based on subscribers, has kicked off its 4G roll outs and Qualcomm will benefit from the network expansion.
