Qualcomm Faces EU Scrutiny Over Radio-Frequency Chips

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The European Commission (EC), the executive branch of the European Union (EU), has launched yet another investigation into Qualcomm over potential antitrust practices. The chipmaker revealed in a regulatory filing that the EC is investigating the company for possible anti-competitive tactics relating to its radio frequency front-end (RFFE) chips, which are used in 5G devices.

Along with 5G modem chips and system-on-chips (SoCs), Qualcomm also supplies RFFE chips to device makers. These chips form part of the link between the modem and the phone.

The issue is that the company is trying to persuade phone makers to buy its RFFE chips together with its own modem chips, instead of buying parts from separate vendors and integrating them. The EC is looking to ascertain whether Qualcomm is leveraging its dominant market position in 5G modem chips and engaged in anti-competitive behavior by doing so.

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According to Qualcomm, the EC requested information on December 3, 2019. The company says it's in the process of responding to the request. If it is found of any wrongdoing, a fine of up to 10 percent of annual revenue can be imposed. Restrictions may also be placed in its business practices.

"It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the EC," Qualcomm wrote in the investor filing. "We believe that our business practices do not violate EU competition rules."

In its latest earnings report, Qualcomm has said that revenue from the radio frequency chips contributed to a sales forecast that beat analyst expectations. The company has already won contracts to sell RFFE chips to Samsung, Google, and LG. Other major suppliers of radio frequency chips are Broadcom, Skyworks Solutions, and Qorvo.

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EU launches another antitrust investigation into Qualcomm

This is not the first time Qualcomm is facing an antitrust investigation by the European Union. In July last year, the company was fined €242 million for anti-competitive, "predatory pricing" practices between 2009 and 2011.

The Commission said that Qualcomm sold 3G chips to Huawei and ZTE at below-cost levels in order to force competing supplier Icera out of the market.

Qualcomm was also slapped with a €997 million fine by the EU back in January 2018. The company had allegedly paid Apple billions of dollars to use only its 4G chips between 2011 and 2016. Qualcomm is appealing both the decisions though.

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The chipmaker is battling a competition case in the US as well. The US Federal Trade Commission (FTC) alleges that Qualcomm is using anti-competitive tactics in its patent licensing deals.

The company was ordered to stop bundling patent licensing deals with its hardware. It was also asked to provide patent licenses on "fair, reasonable, and non-discriminatory terms" to other companies.

However, Qualcomm launched an appeal and the decision has been stayed by a court. It would not have to comply with the decision until the process is concluded. Arguments are reportedly scheduled for 13 February 2020.

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