China handset firms accuse Qualcomm

Chinese handset-makers have told a government inquiry that Qualcomm is charging them up to ten times more for its technologies than other foreign firms.

In a submission to the anti-monopoly probe into the US chip firm, an industry group, Mobile China Alliance,  says Qualcomm's high licence fees have had a “serious impact” on the domestic industry, Shanghai newspaper China Business News reports.

However, the group admits that even if Qualcomm cut its technology licence charges as a result of the investigation, the members are unlikely to benefit because of the intense competition between them.

MCA was set up under the government-backed China Communications Industry Association 15 months ago. Its members include handset-makers such as Lenovo, ZTE and Coolpad and chip firms like Spreadtrum. It said it had interviewed more than 20 companies for the report, which it filed with the National Development and Reform Commission (NDRC) on Sunday.

The NDRC began an inquiry into Qualcomm under China’s anti-monopoly law in November. An adverse finding could mean a penalty of as much as $1.2 billion.

The China Business News report says the NDRC investigation has three purposes:

...first, [the NDRC] probably hopes Qualcomm will reduce its licence fees for LTE chipsets; second, most likely to protect domestic businesses; and third it proceeds from national security considerations.

It says Qualcomm is planning to charge Chinese firms 4% of the retail price for use of its LTE technologies.

Yet although MCA chief Wang Yanhui says the Qualcomm inquiry is a "good thing", his members are not greatly enthusiastic about it.

"China handset vendor competition is very fierce. Even if Qualcomm reduce its prices, they still won't be able to easily grow their profit space."

Update: An earlier version of this post quoted a Beijing Daily News story which wrongly reported that Qualcomm had made a formal offer to the NDRC to drop the inquiry.  In fact, it was InterDigital which had made the submission to the NDRC. Beijing Daily News had inaccurately interpreted its name.