Menu
Qualcomm hit by China fine, cut in Samsung business

Qualcomm hit by China fine, cut in Samsung business

The company has lowered its revenue guidance for 2015

Qualcomm's second-quarter profit dropped 46 percent, mainly because of a large fine the company had to pay in China for settling antitrust issues.

The chip company also cut its revenue outlook for 2015, citing loss of business for its Snapdragon processor from key customer Samsung Electronics and a concentration of the premium market around two players - Apple and Samsung, among other factors.

Qualcomm lost business from Samsung as the South Korean vendor decided to use its in-house Exynos processor rather than the Snapdragon 810 chip in its flagship Samsung Galaxy S6 and S6 edge smartphones. The impact on Qualcomm has been large because makers like Samsung have decided to focus on newer products rather than legacy products. The chipmaker does not expect an immediate shift in its share of components in Samsung's premium devices.

The company cut its revenue guidance for fiscal 2015 to the range of US$25 billion to $27 billion, down from a previous outlook of $26.3 billion to $28 billion.

Qualcomm's Snapdragon 810 has done well with other handset makers with over 60 premium phone design wins including from LG, Sony and Xiaomi, said CEO Steve Mollenkopf in an analyst call on Wednesday. The new Snapdragon 820, scheduled to ship in the second half of this year, has also had good response, he added.

In February, Qualcomm said it had agreed to pay a $975 million fine to Chinese authorities for alleged monopolistic business practices relating to its patent licensing business. It also agreed to modify its business practices.

China's National Development and Reform Commission had been investigating Qualcomm for allegedly engaging in possibly anti-competitive behavior by overcharging device makers in the country. The company faces investigations in other countries, including an ongoing one by the Korea Fair Trade Commission over its licensing strategy.

As a result of the fine in China, Qualcomm's profit in the second quarter to March 29 dropped to $1.1 billion from $2 billion in the same quarter last year. Revenue for the quarter grew by 8 percent to $6.9 billion.

The settlement with NDRC in China prepares the company to participate in the country's adoption of 3G and 4G technologies, Mollenkopf said. The company has already signed up a large licensee in China.

Qualcomm continues to face issues in China, as it believes that certain licensees in China are not fully complying with their contractual obligation to report their sales of licensed products, which include 3G and 4G units. It will take some time for companies to decide whether to continue with existing contracts or adopt the new terms proposed in China. Companies that had delayed signing licenses because of the investigation will also take time to come on board, Qualcomm said.

The company has initiated a review of its cost structure with the help of an external expert. Going forward it sees opportunities not only in smartphones but also in emerging markets such as the Internet of Things and automotive automation.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesconsumer electronicssmartphonesqualcommfinancial results

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments