Qualcomm may face probe into business practices in South Korea

South Korea's Fair Trade Commission is considering an investigation into Qualcomm's business practices, the Wall Street Journal reported, but did not provide additional details. A Qualcomm spokesman declined to comment.

The possible probe would likely look at Qualcomm's practices in licensing its Snapdragon chip, and wireless and modem technologies. Qualcomm earlier this week was fined US$975 million by China for overcharging licensees in the country, and in 2009 was fined $200 million by the South Korea Fair Trade Commission.

Among Qualcomm's top South Korean customers are Samsung, LG and Pantech. Qualcomm downgraded its second-half 2015 revenue when a large customer, most likely Samsung, dropped the Snapdragon 810 chip from one of its top-selling phones.

The China settlement required Qualcomm to unbundle its 3G and LTE licenses and sell them separately from other licensed technology. Qualcomm had to renegotiate some licensing deals as part of the settlement.

Qualcomm owns a large number of 3G and 4G patents, and according to analysts, earns a royalty every time a baseband processor is used in a handset. Its application processors like Snapdragon are used in fewer devices, but bundling licenses allowed Qualcomm to charge more fees. It's possible that South Korea is using the China example to create a favorable business environment for local device makers.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com