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Qualcomm’s business practices under scanner in Japan
TT Correspondent |  New Delhi |  29 Jul 2009

Leading chip-maker Qualcomm is nowadays in news not for any product launch or any new initiative but rather for finding itself embroiled in lawsuits and disputes across the globe.


Japan Fair Trade Commission (JFTC) has issued a notice to the company alleging that it is unfairly coercing Japanese handset manufacturers to use the US giant’s chips. According to the regulator, Qualcomm has devised such a strategy that Japanese handset manufacturers have no choice but to succumb to the pressure and abide by Qualcomm’s proposition.


Qualcomm has said that it is reviewing the draft notice issued by JFTC and will respond to it soon.


“We are unable to comment in detail until we have the opportunity to review a full translation. However, it appears that the draft is directed at common, industry-standard licensing terms that are in fact pro-competitive and were the subject of intense negotiations with very substantial Japanese companies. It is important to note that Qualcomm has never seen any of the evidence upon which the JFTC may be relying and has not, until today, even been aware of many of the allegations. Therefore, we have not yet had the opportunity to respond,” said a company statement.


The notice by Japanese regulator comes within a week of South Korean regulator for fair Trade imposing a fine of $ 207 million on Qualcomm for trade practices adopted by the company. The South Korean regulator had alleged that the company was using its royalty share business proposition to its advantage in an unfair manner by forcing handset-makers to use its chips. The regulator had alleged that Qualcomm charged higher royalties for handset makers who bought modem chips from competitors and offered rebates to those who bought products mainly from the company.


Qualcomm derives about 9% of its business from the Japanese market an as much as 30% from the South Korean market.


Qualcomm follows a royalty-based business model where it retains a significant share of revenue from every handset terminal sold which uses its chips. This model had come under scanner in India as well earlier.

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29 Jul 2009(IST)  
INdia should ensure that Qualcomm does not has its way in 3G pricing for handset trminals.....pricing of terminals will be an important determinan in uptake of the serivces...
Posted By :- Kartik
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