Deals
Qualcomm’s Lucrative Licensing Model Jeopardized by FTC Scrutiny
- U.S. case may revive calls to split chip, licensing businesses
- Chipmaker gets majority of profit from patent licensing
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Qualcomm Inc. built itself into the world’s biggest and most profitable smartphone chipmaker by using a simple formula: selling billions of dollars worth of semiconductors while raking in fat profits from licensing fees tied to the underlying technology.
That lucrative model is under siege on a growing number of fronts -- most recently this week when the U.S. Federal Trade Commission accused Qualcomm of using its dual businesses to thwart competition in the $100 billion market for phone chips. The regulator alleged that Qualcomm forced partner Apple Inc. to use its chips exclusively in return for rebates, or kickbacks, on license fees, a strategy that makes it hard for rivals to take business away from the chipmaker.