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Why Qualcomm Stock Fell Last Week

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Qualcomm stock fell 4.9% last week

Qualcomm stock (QCOM) fell 4.9% in the week ended January 20, 2017. On January 20, Apple (AAPL) filed a $1 billion lawsuit against Qualcomm. Apple accused Qualcomm of anti-competitive tactics, charging unfair royalties, and overcharging for chips. Qualcomm is the leading manufacturer of mobile chips and it supplies chips to leading smartphone companies including Apple and Samsung (SSNLF). In fact, Apple and Samsung account for approximately 40% of Qualcomm’s revenue.

Apple stated, “Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”

Qualcomm’s license fees can be as high as 5% on the wholesale price of the device carrying its technology. The company said patent-licensing income contributed 34% of its revenue in fiscal 2016 with the rest coming from selling chips.

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Other Qualcomm lawsuits

Qualcomm is also facing a $853 million fine in South Korea over alleged violations of the country’s antitrust laws. The Korea Fair Trade Commission (or KFTC) has made multiple accusations against Qualcomm, including that the company is refusing to license some of its technologies to rival chipmakers and forcing phone manufacturers into unfair technology licensing agreements.

In 2015, China (FXI) fined Qualcomm $975 million on claims it violated the country’s antitrust laws. The company was forced to change its business practices.

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