Qualcomm Hits Rough Patch in China


Qualcomm, the America-based microchip maker, revealed this last Monday that the People’s Republic of China has opened an investigation into their company. This is the latest of several investigations by the Chinese government into foreign corporations operating in their borders this year. Some of the targeted companies have been hit by fines in the millions of dollars, while others, such as GlaxoSmithKline, remain under investigation. The Chinese state media service has noted that six major industries have been earmarked by the government for investigation into allegations that the companies are violating antitrust laws.

The sudden increase in the number of probes, each falling under the Anti-Monopoly Law and held by the Chinese government’s National Development and Reform Commission, has been a source of speculation internationally. Some experts have claimed that the companies may be beset by legal inquires due to the Chinese state’s concerns over spying, especially after the revelation earlier this year of espionage by the NSA into seemingly secure information. Others have noted that these relatively broadly selected choices are more likely inspired by the government’s desire to demonstrate its economic mettle and regulatory strength internationally.

Qualcomm may have attracted attention due to both reasons. Many American computer and software manufacturers have experienced fallout due to allegations of NSA spying internationally, and China is especially concerned that it may be a focus of American attention. While Qualcomm has been relatively quiet on this front, spokespersons have noted that the company must be very sensitive to China’s concerns over the security of their products. This security concern may be heightened due to the nature of Qualcomm’s popular product line, which is a set of microchips found in many cellphones.

Qualcomm has also been a very successful company internationally, particularly within the Chinese domestic market where the company has earned at least $12 billion in revenue this last year alone. Their product Snapdragon 800, a kind of processor found within cellphones, will be used with the Samsung Galaxy Note 3 in China to provide greater navigation support in the popular hand-held device. China Mobile has also purchased the Snapdragon microchips to power their smartphones as well. Even Google has installed Qualcomm products into their handsets, although they run the company’s Image Signal Processor rather than the popular Snapdragon. However, with the rollout of 4G service in China, the Chinese government has been attempting to jumpstart locally based manufacturing initiatives. Qualcomm’s success may have sparked concerns within the government that these manufacturers will have difficulty competing in the market with their already popular products. The ultimate outcome of this investigation remains unknown.


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