Qualcomm faces EU probe over smartphone technology

By Bloomberg | 06 Feb 2020 at 17:54hrs
Qualcomm Inc. is back in the European Union's cross-hairs after regulators opened an early-stage probe into some of its wireless technology used in smartphones.

Qualcomm received a request for information from the European Commission on Dec. 3, it said in a regulatory filing on Wednesday.

The EU is homing in on whether the U.S. tech company engaged in anti-competitive behavior by leveraging its market position in 5G baseband processors in the so-called RFFE circuitry.

"We are in the process of responding," it said. "It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed."

RFFE — or radio frequency front-end — circuitry in smartphones is crucial to their speed and power, processing incoming radio signals to be transferred to the rest of the receiver. Qualcomm's RFFE technologies are used in the Samsung Galaxy S10 5G and the Google Pixel 2, according to the company's website.

Qualcomm has already been hit twice by EU fines, getting a $1 billion antitrust penalty in 2017 over payments to Apple Inc. that officials said were an illegal ploy to ensure only its chips were used in iPhones and iPads. The company has fought both fines at the bloc's courts.

The European Commission confirmed sending out questionnaires "as part of a preliminary investigation int the market for radio frequency front-end." The probe is "ongoing" and "we cannot comment on or predict its timing or outcome," the EU press office said in an email on Thursday.

Details of the EU move emerged at the same time as Qualcomm tamped down expectations for sales growth next quarter, saying the payoff from the introduction of smartphones capable of using new high-speed wireless networks will take longer than anticipated.

Shares in the San Diego, California-based company fell 2.3 percent to $88.85 in pre-market trading on Thursday.

Qualcomm, the largest maker of chips for mobile phones, is unique among semiconductor makers in that it gets most of its profit from licensing patents. Makers of handsets pay the company royalties, whether or not they use its chips.

That lucrative profit pool has come under attack as governments around the world scrutinized Qualcomm's business practices.



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