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Qualcomm patent licensing has been heavily fined Taiwan business model again cha

Qualcomm has violated fair play laws by using illegal licensing agreements because of its monopoly position in the chip market, Taiwan's apple daily reported.Taiwan's fair trade commission (TFTC) decided to impose heavy penalties. The illegal case lasted for seven years and involved more than 20 companies inTaiwan, which is a serious case. This is the highest penalty in the history of the Taiwan fair trade commission.

In recent years, China's national development and reform commission, South Korea,the European Union, the United States and Taiwan have all investigated and punished Qualcomm, which has been criticized for its licensing methods as the holder of key patents for cellular communications technology. Qualcomm, for example, calculates its patent fees based on the price of the entire device,not the corresponding chip price, and bundles licensing of key patents with theentire patent portfolio. In other words, they argue that Qualcomm should notcharge for phones, but for chips.

In this investigation, Taiwan fair said that Qualcomm has an exclusive position in the base band chip market such as CDMA, WCDMA and LTE, but it refuses to license itspeers and asks for restrictions, and maintains its exclusive position by not  providing chips without signing licensing contracts. Its business model has harmed the market competition of baseband chips.

Qualcomm's business model is facing shocks and challenges. While Qualcomm is the dominantsupplier of smartphone chips, its licensing business is more profitable,accounting for about 85% of its pretax profit last year.

Steve Mollenkopf, Qualcomm 's CEO, has argued over patent battles that the issue isessentially a 'business' issue, involving disputes over business models and  royalties. 'it shouldn't be a legal issue,' he said.

As amatter of fact, these anti trust rulings have brought Qualcomm a lot ofpressure. At present, it involves two aspects. First, it penalizes previous behaviors, and second, it solves future problems through changes. This posesgreat challenges to Qualcomm 's future business model.

Analysts point out that the real threat to Qualcomm 's business model still comes from apple. In the past two years, apple has launched a series of law suits against Qualcommin the United States, China and the United Kingdom. As apple is a key customer of Qualcomm, the outcome of the lawsuit with apple will also affect the futurere actions of other relevant manufacturers. But apple is unlikely to let go.

Prices of apple IPhone X nearly thousand dollars, for example, by 5% to calculate each iPhone apple need to pay nearly $50 of royalty, and Qualcomm sold to apple's Modem only $18, given the licensing of fair, reasonable and non-discriminatory   principle, Qualcomm certainly don't want to also dare not lowering the apple authorized capture to expend scale, because once reduced, other phone makers must demand the same proportion, a chain reaction is Qualcomm cannot afford.Even if Qualcomm is willing to give apple some rebates through market policies,even if the price of Modem is only $18 for free, it will not satisfy apple'sappetite. What challenges the trend of the dispute is the wisdom of the senior  management of both companies.

Although Taiwan's judgment, perhaps to Qualcomm won't so deadly impact, however the 56-point thrashing of a spate of Qualcomm , and how to resolve this, perhaps,from the perspective of the apple is a way, but this need how long time, the two sides could find a way to solve the contradiction, there are still many ahead of the test.

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