Qualcomm facing record fine in South Korea for breaching fair trade rules

Qualcomm is facing a $900 million fine in South Korea after its Fair Trade Commission found that the California-based chipset company had charged smartphone manufacturers unfairly for its mobile processors.

The company was found guilty of breaching fair trade rules at the conclusion of the agency’s 17-month investigation. Qualcomm charged Samsung, LG and other South Korean smartphone manufacturers higher licensing fees than it should have for its mobile processors. The company used the wholesale price of a smartphone to calculate the fees as opposed to the actual cost of the chips.

An official from South Korea’s FTC revealed how Qualcomm breached fair trade rules, saying: "Qualcomm has been collecting royalty fees from mobile phone manufacturers based on certain fixed rates from the suggest price of a mobile device. Qualcomm should have sought royalty fees based on each chipset".

The company reportedly earns $1.27 billion in royalty fees each year from South Korea alone and last year the country made up 19 percent of its global sales. Qualcomm though is arguing that Samsung and LG would not be the giant smartphone manufacturers they are today without using its chips in their phones.

The South Korean agency is aiming to settle the case for good by the end of the year. If the $900 million fee remains unchanged, it will be the highest one ever issued to a company by the agency.

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