When you think of Qualcomm, what comes to mind? For many, the Qualcomm name evokes images of their powerful Snapdragon application processors and their outstanding 5G modem chips. But there is another side to the San Diego-based company that seems to have been forgotten. Yes, the fabless chip designer has a dark side when it comes to dealing with phone manufacturers.
Qualcomm’s “No License, No Chips” mantra has been a point of contention for phone manufacturers. They are not happy about this and other questionable sales practices employed by Qualcomm. Some of these practices include computing royalties based on the higher retail product price of a device containing its chips rather than the price of the chips themselves. Additionally, complaints have been made that Qualcomm fails to license standard essential patents (SEP) on a fair and non-discriminatory (FRAND) basis.
According to The Register, Qualcomm has agreed to pay $75 million to settle a class action suit brought by investors in the company’s stock. The investors claim that Qualcomm made misleading statements that artificially inflated the price of its shares. Specifically, they allege that Qualcomm inaccurately stated that its chip sales and licensing businesses were separate units and falsely claimed it refused to license standard essential patents to competitors.
The lead plaintiffs in the case are satisfied with the settlement, deeming it a “favorable result” given the risks involved in litigation. However, final approval from Judge Jinsook Ohta of the U.S. District Court for the Southern District of California in San Diego is still pending. A final settlement hearing is scheduled for June 26th.
News of the settlement moving closer to approval had a positive impact on Qualcomm’s shares today, causing them to soar $4.87 (2.19%) to $227.09 in mid-afternoon NASDAQ trading.
