It’s no secret that Qualcomm is the wireless company everyone loves to hate. For the mobile world, its the Microsoft of the industry, angering competitors in many markets it dominates through its aggressive–or many would say monopolistic–business practices. So it wasn’t so suprising that Texas Instruments and Broadcom joined the ranks of the anti-Qualcomm league, accusing the company of abusing its stranglehold on the South Korean wireless market. TI and Broadcom were two of the six companies that filed similar complaints against Qualcomm in Europe as well.
It is important to note, that the San Diego giant has a patent portfolio which is pretty far reaching and protects the chip maker from its rivals. Still, the company’s stock has taken a turn for the worse, because of all the negative news.
And that wasn’t the first time Qualcomm has angered competitors in Korea. At the CTIA show in Las Vegas this April, Qualcomm CEO Paul Jacobs spoke to a room of reporters on its great relationships with local parters in international markets, while his PR team left a stack of papers at the door trying to explain why that week Qualcomm’s South Korean offices had been raided by the Korean Fair Trade Commission.
With royalty rates like 5.25% on local Korean CDMA handsets and 5.75% on exports by South Korean manufacturers, according to the AFP article, its not hard to see why companies are disgruntled. [Qualcomm doesn't reveal its exact royalty rates.] Others are concerned that Qualcomm will try to assert those high royalty rates through other wireless technologies beyond CDMA in South Korea, through its Flarion’s tech–though WiBro is getting touted pretty aggressively.
Qualcomm has said it will try to work with partners to lower the cost of handsets, not the royalties. Guess the idea is that if you can strong arm others to take the cut, then you don’t have to. The plan makes money in the short term, but in the long run, pissed off partners isn’t a good business model.