Record fine to have little impact on Qualcomm

"Qualcomm's advantage in cross licensing will help Chinese vendors go overseas without being trapped in patent lawsuits."

Derek Aberle, president of Qualcomm, said because the National Development and Reform Commission's investigation has concluded, the company's licensing business is now "well positioned" to fully participate in the country's rapidly accelerating adoption of the 3G/4G technology.

The NDRC said "unfair" and "excessively high" royalties Qualcomm collected from Chinese smartphone makers were the key factors behind the record fine. Other factors include the company's violation of the nation's Anti-Monopoly Law, including product bundling and imposing unreasonable conditions for the sale of baseband chips.

The reduction of royalty and removal of the standards-essential patents from the non-essential ones in the license will not change the handset vendor landscape in the short term. All the major players will enjoy a reduction in patent costs and be able to enjoy higher profit margins, the experts said.

Qualcomm narrowed its financial guidance for fiscal year ending Sept 27, after the antitrust penalties were announced. The company's annual revenue was estimated to be $26.3 billion to $28 billion compared with the prior guidance range of $26 billion to $28 billion.

Meanwhile, local smartphone makers have expressed mixed feelings about the NDRC decision.

ZTE Corp, one of the largest smartphone makers in China, said it welcomes the NDRC move.

Steven Mao, vice-president of ZTE, said: "The resolution will have a deep influence on the global communication industry and is good for China to build a business environment that focuses on protection of intellectual property rights."

ZTE, Lenovo Group Ltd, Huawei Technologies Co Ltd and Xiaomi Corp are among Qualcomm's biggest customers in China. Though the companies rely on the US firm for mobile chips, they had expressed concern about the high patent fees charged by the US company and said it hurt their profitability.