China's antitrust regulator has confirmed that Qualcomm Inc, one of the world's biggest mobile chipmakers, has a monopoly, the state-run Securities Times newspaper reported on Thursday, as Qualcomm's chief executive held talks in China.
The regulator, the National Development and Reform Commission (NDRC), is investigating Qualcomm's local subsidiary after it said in February the U.S. chipmaker was suspected of overcharging and abusing its market position In wireless communication standards, allegations which could see it hit with record fines of more than $1 billion.
The Securities Times report, based on unidentified sources it said were close to the NDRC, did not say whether the regulator had determined that Qualcomm had abused its monopoly.
The newspaper said Qualcomm was charging lower royalties for patents to undercut competitors who have similar technology and maintain market share. The report also said that Qualcomm, as the only provider of chips for high-end phones, can dictate those licensing fees.
Qualcomm CEO Steven Mollenkopf, who launched a $150 million "strategic venture fund" in China on Thursday, declined to take questions from reporters. A Qualcomm spokeswoman travelling with Mollenkopf also declined to comment.
The NDRC declined to provide immediate comment when contacted by telephone.
The Securities Times report said the NDRC was probing Qualcomm's local sales data and that Qualcomm President Derek Aberle has been communicating with the NDRC over issues relating to the anti-monopoly investigation.
"The NDRC anti-monopoly investigation is extremely serious," the Securities Times quoted the sources as saying.
"It's not just Qualcomm under investigation but also its customers, and (the NDRC) has sealed off a lot of documentation."
While Qualcomm's share of patents relating to wireless network technology standards for mobile communications has fallen, their prices haven't changed, the report said.
Under China's six-year-old anti-monopoly law, the NDRC can impose fines of between 1 and 10 percent of a company's revenues for the previous year. Qualcomm earned $12.3 billion in China for its fiscal year ended September 29, or nearly half of its global sales.
Qualcomm has previously said it is cooperating with the investigation.