Qualcomm today said it has reached a resolution with China’s National Development and Reform Commission (NDRC) over allegations that the chipmaker violated monopoly laws.
First, Qualcomm has agreed to pay the NDRC a fine of approximately $975 million. Further, it agreed to a number of changes in how it strikes licensing agreements with Chinese handset makers. For example, the company will now have to offer essential Chinese 3G and 4G patents separately from other licenses and will have to strike cross-licensing agreements “in good faith and provide fair consideration for such rights.”
Qualcomm must license 3G/4G chips at a royalty rate of 5% and 4G-only chips (without CDMA) at a royalty rate of 3.5%. Moreover, the royalty will be based on only 65% of the net selling price of the phone. Qualcomm must allow existing licensees to take advantage of the new terms effective Jan. 1.
Last, Qualcomm can’t “condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement.”
Qualcomm said it was disappointed with the results of the investigation, but it is glad the NDRC has agreed to the terms and all parties involved can move forward.
