Qualcomm faces new criticism from China

The chipmaker is chided for its involvement with a Chinese antitrust expert, who has been dismissed as a government adviser for helping a consulting firm write a report for Qualcomm.

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Stephen Shankland/CNET

An anti-monopoly investigation in China is stirring up more trouble for Qualcomm.

China's state-run news service has criticized the chipmaker for its connection to an antitrust expert who did work for Qualcomm while holding a government advisory role, Reuters reported Thursday.

Since November, the San Diego-based company has been under investigation by China's National Development and Reform Commission, an antitrust regulator looking into potential monopolistic practices by Qualcomm in China, primarily related to its licensing business. Last month, a state-run newspaper said regulators found that Qualcomm was indeed abusing a monopoly and could face more than $1 billion in

Other multinational companies also have been struggling with investigations in China, including Microsoft. This has sparked concerns that China may be using antitrust laws to support domestic companies.

On Thursday, Reuters said economist and antitrust expert Zhang Xinzhu was dismissed as an adviser on an antimonopoly committee for the State Council, China's cabinet, after working for a consulting firm that helped Qualcomm write an economic analysis for antitrust regulators. The economic report was submitted to regulators in May.

The state-run Xinhua News Agency said Wednesday that Zhang was dismissed for taking "huge rewards" from Qualcomm for the work. However, Qualcomm denied having any direct financial dealings with Zhang and added that hiring economic experts for such a report was routine, according to Reuters. Qualcomm said it paid the consulting firm, Global Economics Group, a standard rate for its work.

Zhang told Reuters: "(My) individual strength is too insignificant, and the machine of state too powerful. There can only be silence."

Qualcomm, which holds a dominant position selling wireless processors, said separately last month that it believes some licensees in China are under-reporting their licensed-product sales to the company, while it also faces a dispute with a licensee. The under-reporting could be especially harmful for Qualcomm, since its licensing segment provides most of the company's profits.

The company has said it was cooperating with regulators on the investigation.

Zhang and representatives from Qualcomm and Global Economics Group didn't immediately respond to requests for comment from CNET.

 

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