Chinese authorities have asked Qualcomm to collect lower patent fees from smartphone manufacturers that deploy its technology, following an antitrust investigation that began a year ago.
China's National Development and Reform Commission may also want the U.S. vendor to unbundle its licensing agreements, reported Bloomberg citing various sources. Should Qualcomm reach an agreement, it would put an end to the year-long anti-competition probe but impact a significant revenue source.
According to Bloomberg, the chipmaker has chalked up US$30.5 billion in licensing fees over the last five years. It had offered to pay a higher fine if it didn't have to alter its licensing structure, but this was rejected by the Chinese government, which was aiming to halt Qualcomm's licensing schemes that forced customers into cross-licensing deals, limiting royalty payments from other Qualcomm customers. The chipmaker had defended its patent model, saying its blanket deals benefited the industry by protecting customers from infringement lawsuits.
While concerned about about not losing access to the sizeable Chinese market, Qualcomm is also anxious about China's bid to force a change to its business model, which may potentially lead to similar changes in other economies.
The world's biggest chipmaker already may face another regulatory probe in Europe over its practices.
China also has launched various investigations against other foreign companies over security concerns, including Microsoft, Kaspersky, and Symantec. The government has been ramping up efforts to remove foreign technology, especially those used in banks, the military, state-owned enterprise and government agencies, and replace them with home-grown alternatives.
It recently announced plans to put in place a rating system to assess the trustworthiness of cloud computing vendors, allowing only those with full security clearance to partake in government projects. The move could leave foreign companies out of government procurement contracts.