February 6, 2020
The EU is investigating Qualcomm over antitrust concerns.
The bloc hopes to determine whether Qualcomm used its strength in the modem market to gain dominance in another.
If found guilty, Qualcomm could be fined up to 10% of its annual revenue.
- One of Qualcomm's core businesses is producing modems, which connect devices to networks. But in 2016, it started a joint venture with the Japanese company TDK to produce "radio frequency front-end" chips, or RFFE, which connect modems to antennas.
- Last year, Qualcomm bought out TDK's stake in the venture for $3.1 billion, announcing "a complete end-to-end solution from modem to antenna."
- Reuters reports that Qualcomm asked companies to buy its RFFE and modem chips as part of a package. If the EU thinks such behavior was at the expense of other RFFE providers, like Broadcom, Skyworks and Qorvo, it might intervene.
- Qualcomm reported the investigation Wednesday, when it also told investors that RFFE sales to firms such as Samsung helped contribute to better-than-expected sales.
- But Qualcomm is no stranger to antitrust investigations, and is unlikely to suffer too much at the hands of this one. As Chaim Siegel, an analyst at Elazar Advisors, told Reuters: "They have market clout because their technology is much better than the competition."