Chinese regulators have hit Qualcomm with a record $975 million fine as part of a settlement that will clip the wings of the American firm’s high-flying chip business.
Despite the eye-popping penalty, the deal announced Tuesday by Qualcomm(QCOM, Tech30) was better than many analysts expected, and should be the final word in an anti-monopoly dispute that dates back to late 2013.
Qualcomm shares jumped almost 3% in premarket trading. In the statement announcing the settlement, the chipmaker raised its revenue target from a minimum of $26 billion to $26.3 billion for the current fiscal year.
Under the terms of the deal, Qualcomm is required to cut royalty rates paid by Chinese smartphone makers that buy its chips and license its patents.
The San Diego-based tech firm said it will not pursue further legal proceedings, and accept a ruling from China’s National Development and Reform Commission that the company had violated anti-monopoly laws.
For Qualcomm, the settlement largely preserves its China business — an all-important source of revenue for the company.
“Our belief that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G/4G technology,” Qualcomm said in a statement.
Qualcomm is not the only foreign firm to be investigated under China’s anti-monopoly law. Chinese authorities have also scrutinized Microsoft(MSFT, Tech30), as well as automakers including Mercedes Benz, Audi and Chrysler.
Foreign business groups have raised concerns that the statute is being used to unfairly target non-Chinese firms, a charge that Beijing has denied.