South Korean high court ratifies $873-million fine against US chip giant Qualcomm

South Korean high court upheld $873 million fine on US chip giant Qualcomm over unfair business practices linked to patent licensing and modern chip sales.

Qualcomm’s appeal against the penalty sanctioned by the Korea Fair Trade Commission (KFTC) in 2016 was rejected by the Seoul High Court, under the ruling of Judge Noh Tae-ak. The penalty was imposed over claims that the company abused its prevalent position in the market.

“The defendant exerted a significant influence over mobile phone manufacturers either through unfair relationships or making them depend on the defendant’s supplies of modem chipsets,” Judge Noh said in his ruling.

However, KFTC’s claims that the company had disadvantaged smartphone makers on the grounds of signing “comprehensive” licensing deals was ruled by the court to be lacking in evidence, allowing Qualcomm to continue with the practices.

Whether the two parties will appeal to the court’s ruling is unclear as of the moment.

Qualcomm is the world’s largest supplier of mobile phone chips, most popular to provide South Korean smartphone makers LG Electronics and Samsung Electronics, as well as Apple Inc. The company derives its profit mostly from inventing and licensing technologies.

“This ruling will not really affect or weaken Qualcomm’s status in the market, because we are heading into the 5G era and Qualcomm is one of a very few companies that can manufacture 5G modem chips,” analyst Park Sung-soon of Cape Investment and Securities said.

“Handset makers and telecom companies will still have to heavily rely on Qualcomm’s products regardless of its supposedly unfair business practice.”