Qualcomm became the latest US technology company to suffer a reversal in China, as it warned on Wednesday that a government investigation there had added to its difficulties in collecting licensing fees on new mobile devices.
The mobile chipmaker’s shares slid by as much as 5 per cent in after-market trading after it forecast that it would miss out on licensing fees on as many as a quarter of a billion smartphones and tablets made in China this year.
The warning follows a dent to Chinese revenues at other US IT companies such as Cisco and IBM, which have been hit by falling demand amid reports of official Chinese moves to discourage purchases of US technology in the wake of the intelligence revelations by former CIA contractor Edward Snowden.
Apple’s iPhone was also the subject of a critical report by the government-controlled CCTV this month over alleged privacy weaknesses. The company disclosed on Tuesday that robust sales in China had underpinned its results for the quarter ending in June.
Qualcomm said that an official antitrust investigation in China, launched early this year, had caused some hardware companies to hold back from signing new licences to use its technology, which is included in all chipsets used in 3G and 4G devices.
“It’s clear to us that the investigation, among other things, is creating an increased level of uncertainty with the licensing base in China right now,” George Davis, chief financial officer, said on a call with analysts on Wednesday.
Qualcomm said that other factors behind the lost Chinese licence fees included a contract dispute with an unidentified large handset maker; an underreporting by some companies of the number of handsets they ship; and the time it would take to reach agreements with makers of low-priced tablets that had never held licences from the company before.
A failure to correctly forecast the timing of new LTE network launches in China had also contributed to a failure to license the many handset makers who produce LTE-only devices in time, the company said. In all, it predicted that it would miss out on fees on 170m-260m handsets made in China this year.
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