Qualcomm was recently fined by a South Korean agency for antitrust violations. The agency has asked the chip maker to pay a fine of $853 million.
As per the ruling, Qualcomm had committed unfair business trades with smartphone manufacturers such as Samsung, LG, Apple, and others. The company made customers pay additional royalty fees for patents that weren’t necessary, thereby making more profit from each handset sale. Qualcomm has stated that it will fight the ruling and ask for a stay order as it disagrees with this decision.
According to some industry analysts, this may lead to reduced royalty payments and thus reduce the prices of smartphones. However, a new report suggests that may not be the case. The Qualcomm wireless chips are standard in most smartphones and are used by Samsung, LG, Apple, HTC, and everyone else.
By letting these companies use Qualcomm’s patents and chips, they make a profit off their smartphone sales. For example, Samsung pays a certain percentage as royalty to Qualcomm on sale of every Galaxy S7/S7 Edge smartphone.
And since there is no other modem chip maker, customers will have to pay what Qualcomm asks for its patents and chips. Therefore, even if the royalty payments are reduced, Samsung may probably not reduce the prices of its smartphones.
Source: The Investor
