Qualcomm Inc’s battle with rival chipmakers now embraces the globe after Broadcom Corp and Texas Instrument Inc filed complaints against the company with the South Korea’s Fair Trade Commission alleging that it is abusing its market power.
The battleground is well chosen. South Korea is a leading user of CDMA technology, and two local streaming media companies have already filed complaints against Qualcomm. The country is also home to two of Qualcomm’s biggest handset customers, LG Electronics and Samsung.
According to Qualcomm’s last annual report, LG, the world’s fourth largest handset maker, was responsible for 15% of its $5.67bn revenue in 2005, and spent $850m on Qualcomm’s chips and royalties. Samsung, the world’s third largest handset supplier, with sales of $19.9bn last year, provided Qualcomm with sales of $737m.
The FTC is already studying complaints against Qualcomm from Korean companies Nextreaming and Thin Multimedia which complained it was infringing the country’s competition law by bundling its streaming software with its chipsets. Qualcomm executives in Korea have already been grilled by the FTC. An organization that the Korea Times refers to as the iron-fisted regulator lived up to its name last December when it fined Microsoft for bundling IM and media software with Windows.
Last year, Broadcom, Nokia, Texas Instruments, NEC, Panasonic, and Ericsson filed complaints with the European Commission, alleging that Qualcomm violated European Union competition law with its WCDMA licensing practices. Broadcom also launched legal action against Qualcomm in the US, alleging that the company’s licensing practices on cellular technology violated antitrust laws and kept handset prices unnecessarily high.
The whole shape of the future competitive landscape in wireless technology will be shaped by negotiations between Qualcomm and Nokia on a new license agreement to replace the present one which expires on April 9, 2007.
Qualcomm has already launched action against Nokia claiming patent infringement in the US and the UK. With lawyers involved, much will be heard about IP rights, but behind it all is a brutal competitive struggle for shares of the huge revenues generated by the rapidly growing industry.