China's anti-monopoly regulator has made its first public remarks about its probe of Qualcomm's (QCOM +0.2%) licensing deals with local OEMs, and the comments (by mentioning the regulator has received complaints Qualcomm "abuses its dominant position in the market and charges discriminatory fees") suggest authorities aren't backing down.
At the same time, the regulator says it's in talks with another 3G/4G patent owner, InterDigital (IDCC -1.2%), about a potential settlement. InterDigital has previously claimed the Chinese government threatened to arrest or detain its employees over its efforts to collect royalties from Huawei.
The Qualcomm probe is widely seen as an effort to obtain lower royalty rates as Chinese 4G LTE adoption ramps. Given Qualcomm often doesn't collect royalties on sales of phones supporting China Mobile's TD-SCDMA 3G network, the launch of LTE networks by all three Chinese carriers stands to boost the percentage of local phone sales Qualcomm collects on.
It also stands to increase Qualcomm's Chinese baseband chip share. The company mentioned on its FQ1 CC (transcript) its mid-range Snapdragon 400 processor had scored 70+ 3G/4G design wins with Chinese OEMs.