06 November 2014, 13:08 / Business

The USA and Europe will check Qualcomm after China

American electronic chip developer Qualcomm will participate in three anti-competitive conduct proceedings simultaneously, the Financial Times reports. Along with inspections in China, which have been ongoing since last year in the wake of distrust in foreign companies, the company’s business in the United States and Europe will be audited.

The two inspections, which began last month, were disclosed in a company report yesterday. The review in the US concerns the company's patents, it was started by the US Federal Trade Commission - according to the agency, Qualcomm does not fulfill its obligations to other companies by not giving them access to some of its technologies, FT reports. European inspections are related to the company's commercial activities in the field of chipsets and European authorities are interested in discounts and other financial incentives provided by the company, FT reports.

Qualcomm says tests in the US and Europe are in the preparatory stage. Analysts have previewed the ongoing proceedings in China, which are only a small part of the country's activity against foreign companies. The reason for this is the revelation of former US National Security Agency employee Edward Snowden, who spoke last year about the close cooperation of the US high technology industry with American intelligence.

Although the three investigations are separate from each other and are being conducted in three different regions, regulatory requirements in one country may affect the situation in another part of the world, the FT reports the words of Qualcomm President Derek Eberle, who is responsible for the investigation in China. “Our activities fully comply with the laws of these countries, and we are completely open to authorized agencies,” Qualcomm CEO Steve Mollenkopf reports to FT.

By market close, Qualcomm shares fell 6 percentage points after the company disclosed revenue and profit that were below analysts' expectations. Another reason for the decline in shares FT cites weak sales to Chinese customers, who are not signing new licensing agreements with Qualcomm, waiting for the results of regulatory checks.

Qualcomm sells cellular chips to many of the world's mobile device makers, including Apple and Samsung, and holds patents on the basic operating principles of 3G and 4G networks.

Qualcomm receives half of its revenue from Chinese customers, since most smartphones are manufactured in this country. In November 2013, China's National Development and Reform Commission launched an investigation into the licensing of Qualcomm's intellectual property. If the agency finds the company guilty, it will have to change the way it operates in China and also pay a fine of 10% of revenue, estimated at $1 billion.

Materials used: Financial Times