South Korea Steps Up Investigation of QUALCOMM

Jan. 3.07 | About: Qualcomm Inc. (QCOM)

South Korea's Fair Trade Commission has formed a task force, similar to the one investigating Microsoft, which will attempt to determine whether QUALCOMM's business practices impair competition and if its royalty demands are excessive. QUALCOMM's CDMA technology, which competes globally against the GSM standard, is used exclusively in S. Korea among the 80-plus % of the nation's population of 48m that use cellular phones. An FTC official admits the investigation has been ongoing since last April amid reported difficulties in establishing facts. QUALCOMM declined to comment until it receives an official inquiry. A local industry analyst says the FTC's task force "... can be seen as political pressure on Qualcomm ..." to operate on a more level playing field, considering local companies "... have constantly complained about QUALCOMM demanding too much royalty." QUALCOMM faces similar allegations in Japan, the EU and the U.S.

• Sources: The New York Times
• Related commentary: Nokia-QUALCOMM's Battle Royale, QUALCOMM Buys WiFi Startup And RF's Bluetooth Assets to Take On Intel, QUALCOMM's Empire Is Under Siege, QUALCOMM Beats Earnings Targets. Conference call transcript: QUALCOMM F4Q06
• Potentially impacted stocks and ETFs: QUALCOMM (NASDAQ:QCOM). ETFs: Broadband HOLDRs (NYSE:BDH), Wireless HOLDRs (NYSEARCA:WMH), iShares Goldman Sachs Networking (NYSEARCA:IGN)

Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.