Qualcomm Inc. notched a victory in its effort to preserve its patent-licensing business, as it reached a settlement with the Taiwanese government that revokes a previous finding against the chip maker and saves the company nearly $700 million in fines.
The settlement comes as world’s dominant supplier of chips for smartphones seeks to chart a new path following a tumultuous year that involved fending off a takeover effort by rival Broadcom Inc. and abandoning its takeover of NXP Semiconductors NV amid trade tensions between the U.S. and China. Chief Executive Steve Mollenkopf is pursuing an ambitious plan to lift earnings and reduce the company’s dependence on smartphone-related chip sales, all while battling legal challenges to its licensing business from Apple Inc.
Qualcomm’s issues in Taiwan spiked in October when Taiwan’s Fair Trade Commission fined the company $773 million and ruled Qualcomm violated the country’s laws by unfairly licensing its patents, a decision that could have upended Qualcomm’s business by forcing it to license its intellectual property to other chip makers.
The settlement revokes Taiwan’s ruling, Qualcomm said. In its place, Qualcomm said it has pledged to negotiate in good faith with Taiwanese handset makers including HTC and agreed to let Taiwanese authorities intervene to resolve any negotiation-related disputes.
Qualcomm also said it committed to invest an undisclosed amount of money over the next five years in Taiwan by collaborating on 5G technology with chip makers and others, funding research-and-development projects with universities and developing a Taiwanese center for operations and manufacturing engineering.
Under the agreement, Taiwan will keep $93 million in payments from Qualcomm toward the fine assessed last year, but the remaining amount was waived, according to the chip maker.
Qualcomm continues to face regulatory challenges in the U.S., where the Federal Trade Commission sued it in early 2017, alleging the company engaged in unlawful tactics to maintain a monopoly on cellular-communications chips. It also is appealing an $853 million fine by South Korea’s Fair Trade Commission over alleged antitrust violations.
In the U.S., the company remains mired in a legal battle with Apple and several Taiwanese manufacturers, which have sought to end the chip maker’s practice of collecting royalties on the entire sales price of a handset.
Write to Tripp Mickle at [email protected]
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