Icera spearheads new EU probe into Qualcomm

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Icera spearheads new EU probe into Qualcomm

Six months after last investigation ended, US chip giant faces antitrust allegations

By CAROLINE GABRIEL

Published: 17 June, 2010

Just when antitrust heat on Qualcomm seemed to be easing, the chip giant faces fresh probes by the EU, only six months after the European Commission dropped its last investigation after four years.

As often happens in these cases, the new complaint is spearheaded by a relatively small Qualcomm rival, but could attract backing of larger firms with an interest in curbing the wireless major's influence over handset silicon business structures and IPR. The complainant is Icera, a UK specialist in 3G and 4G modems, which claims, according to UK newspaper The Financial Times, that Qualcomm is using patent-related incentives to deter vendors from buying from Icera.

The two companies have been in more direct conflict lately, and Icera is the latest in a series of companies to claim that Qualcomm's practises, particularly its supposed linking of patent licenses and chip sales, make it hard for smaller innovators to penetrate the market.

Icera's main business has been in dongles and other PC-related products, but it recently raised a new round of funding to ease its path into the smartphone big time, and has a very differentiated offering in software driven 4G products. Here it would be playing in the market dominated by Qualcomm. Unlike Icera, Qualcomm traditionally offers integrated modem/application processor designs, rather than standalone basebands, but a couple of years ago, it moved into the modem-only territory itself with the successful Gobi offering for embedded wireless PCs and other devices.

The probe is at an early stage but, if the Commission decides to proceed, it could draw larger players into the dispute. The last EU investigation, which was mirrored by legal cases in the US, were led by Broadcom and Nokia, with support from Ericsson, Texas Instruments and others. However, when Qualcomm announced settlements of various legal cases with Broadcom and Nokia, the EC decided not to pursue the matter further, and the other complainants also dropped out. The Commission could have proceeded despite the Nokia settlement, but it said this course of action would not be a good use of its resources. However, insiders implied the EC was not fully satisfied that there was no case to answer, so some parties may welcome Icera's reawakening of the debate.

"Qualcomm may be getting a little worried about pricing. It is struggling to maintain its 60% margins and now it is seeing these guys coming into the market with a soft modem that could potentially disrupt the pricing further," Lee Simpson, semiconductor analyst at Jefferies, told the FT.

Qualcomm said in a statement that it understood the Icera complaint was at "a very preliminary stage" and that it was reviewing the allegations. "We do note, however, the similarity between Icera's allegations and those in complaints made previously to the EU, which apparently failed to persuade the Commission and were ultimately withdrawn. We believe the new allegations to be equally meritless," it said, though it said it would co-operate fully with the Commission. The EC and Icera refused to comment.

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