25 November 2013
Last updated at 20:58 ET
Qualcomm’s Snapdragon chips are used in Android, Windows Phone and Blackberry devices
China has launched an antitrust probe against one of the world’s biggest chipmakers, the US firm Qualcomm.
Qualcomm said the probe involved China’s anti-monopoly law, but added that regulators told it the “substance of the investigation is confidential”.
The firm said that it was “not aware or any charge” by the regulators that it had broken the law.
China has increased scrutiny of business practices that lead to higher prices for consumers.
In August, Chinese regulators levied a record fine of 670m yuan ($109m; £71m) on six foreign producers of baby milk formula for price-fixing.
China’s National Development and Reform Commission, the body which is probing Qualcomm, also launched a pricing investigation into the pharmaceutical industry earlier this year.
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You’re getting ready to have this battle over 4G royalties and now you have this antitrust investigation”
The investigation against Qualcomm also comes at a time when China is gearing for the launch of 4G Long Term Evolution (LTE) Networks.
The country will start commercial 4G mobile communications services on 18 December.
China Mobile, the country’s biggest mobile operator with over 700 million users, will be the first one to offer the services to its subscribers.
That will be followed by China Unicom and China Telecom, the country’s other two major carriers.
The US firm is a key player in the area and some analysts suggested the probe against it may be an attempt to help domestic players in China.
“We suspect this investigation is related to the forthcoming launch of TD-LTE by China Mobile… and the negotiations on chip pricing and license pricing between Qualcomm and Chinese-based handset [manufacturers] that are likely occurring right now,” said Travis McCourt an analyst with Raymond James Associates.
Cody Acree, an analyst with Williams Financial, added: “You’re getting ready to have this battle over 4G royalties and now you have this antitrust investigation”.
“It may well be that this reform commission is beginning to throw up reasons and excuses for why China doesn’t pay royalties on 4G.”