Qualcomm is being probed once again by the European Commission, this time to ascertain if it abused market dominance in 5G modem chips to stifle competition in radio frequency front ends (RFFE).
The disclosure came in its 10Q regulatory filing (PDF, page 13) delivered on Wednesday alongside financial results, where it acknowledged the commission made contact in December with a Request for Information.
According to the filing, the commission is probing "whether we engaged in anti-competitive behavior in the European Union (EU)/European Economic Area (EEA) by leveraging our market position in 5G baseband processors in the RFFE space".
If the commission finds Qualcomm broke the rules, a "broad range of remedies" can be imposed by the regulator, including a stiff penalty of up to 10 per cent of annual revenues, or "injunctive relief prohibiting or restricting certain business practices".
The company has tried to convince customers to single-source its modem processors and RFFE chips, snubbing RFFE rivals including Broadcom and Skyworks Solutions.
Qualcomm denies it has broken any EU competition rules and is currently in the process of responding to the complaint. It's not clear whether the preliminary investigation will escalate into a formal court battle. Qualcomm said "it is difficult to predict the outcome".
The Register has contacted Qualcomm for comment.
This isn't Qualcomm's first run-in with the European Commission. Last July, the chipmaker was fined €242m – or 1.27 per cent of its global revenue – after the commission concluded Qualcomm forced its main rival, Bristol-based Icera, out of the UMTS baseband market by selling its chips below cost.
The effect of this was devastating. Icera was ultimately sold to Nvidia, who hoped to integrate the firm's modems into its Tegra processors. That never happened, with Nvidia ultimately announcing it would wind down Icera operations. Nvidia later sued Qualcomm over the episode.
The previous year, the commission fined Qualcomm €997m – or 4.9 per cent of global revenues in 2017 – over claims it abused its relationship with Apple to limit competition in the LTE baseband market. The complaint centred around the allegation that Qualcomm paid billions of dollars in kickbacks to Apple so it would be its exclusive customer.
Qualcomm has appealed both rulings. Incidentally, Apple is in the process of building its own baseband independence, having acquired the 5G modem operations of Intel for a cool $1bn after competing with Qualcomm over the purchase.
As for Qualcomms' Q1 results for the three months ended 29 December 2019, revenue jumped 5 per cent to $5.07bn. This included a 5.8 per cent decline in equipment and services to $3.534bn and a 41 per cent hike in licensing to $1.543bn.
Profit dropped to $925m from $1.068bn, largely due to a tax benefit in the prior year not being repeated. ®