Qualcomm Deep in Trouble After Near-$1 Billion Loss for Antitrust Violation
A day before, the world’s biggest chip maker Qualcomm was penalized by the Chinese Regulators for antitrust violations. The chip making firm was fined with a record amount of around $1 billion and the company agreed for a settlement with Chinese antitrust authorities. But the trouble for the US-based firm hasn’t ended yet and the reason for the revenue dip this time is the smartphone producers.
Qualcomm gets a major part of its revenue from the royalties based on the handsets’ value and with companies like Xiaomi and Huawei reducing the handset price to set at the top of the competition, the profit margin is slipping for Qualcomm.
Bernstein analyst Stacy Rasgon made a statement –
You’ve got all these Chinese companies – like Xiaomi, Huawei and Lenovo – that want to go global and take share from Samsung Electronics, HTC and presumably even Apple, but they’re going to do it at much lower price points.
Yesterday, Qualcomm agreed to pay $975 million as fine for settlement with Chinese antitrust authorities. National Research Development Corporation (NRDC) held an anti-monopoly investigation and found Qualcomm guilty. The company underwent changed practices in licensing patents for mobile phones sold in China. Qualcomm did not contest and agreed to pay to the Chinese National Development and Reform Commission.
The chip maker is already under pressure because of increasing competition by Intel, Marvell, MediaTek and HiSilicon. Even major brands are dropping Qualcomm for the next top-tier phones. Qualcomm has to take a step now to sustain the top chip maker position.