Qualcomm being investigated by China

Qualcomm issued a press release this morning saying that the company is being investigated by China’s National Development and Reform Commission (NDRC) regarding Chinese Anti-Monopoly Law (AML). What exactly did Qualcomm do to deserve this? That’s apparently confidential information, but I (and the BBC) have a sneaking suspicion this has something to do with patents.

Qualcomm invented many of the wireless technologies that all modern smartphones use. China being being China, they don’t really respect patents. Companies like MediaTek, AllWinner and RockChip probably want to expand globally, but can’t, because Qualcomm will chase them down with an army of lawyers.

How exactly does this relate to Android? Every Android phone worth buying today is powered by a Qualcomm chip. If Qualcomm gets in trouble in China, which is currently the world’s largest smartphone market and will likely remain so for the foreseeable future, that’s going to deeply hurt the company. And the last thing anyone wants to see is a limp Qualcomm, counting pennies here and there, becoming averse to risk because they have a China problem.

What’s probably going to happen? Qualcomm is going to have to put up with less revenue in China, which means tweaking their business model to make up for the loss. Worst case scenario, handset makers switch to MediaTek after Qualcomm comes along and asks for more money. While I severely doubt that’ll happen, you never really know in this industry what’s going to happen in a few years.

Update: Several hours after this article was published, Reuters put up an article explaining the complicated and messy situation Qualcomm is in. Basically, Qualcomm will be in a monopoly position come December when China Mobile launches their 4G LTE network, because Qualcomm will be the only company that makes chips that can connect to said network.