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What Drove Qualcomm Stock Lower on May 22?

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Qualcomm stock lost 10.9% overnight

Qualcomm (QCOM) fell 10.9% yesterday to close trading at $69.31. A US district judge issued a judgment against Qualcomm. In 2017, the FTC (Federal Trade Commission) sued Qualcomm for anti-trust violations. According to District Judge Lucy Koh, Qualcomm disrupted competition in the modem chip market by refusing to license SEPs (standard essential patents) to rivals and entering an exclusive deal with large customers like Apple. The judge believes that these practices hurt rivals, OEMs (original equipment manufacturers), and end consumers.

Now, Koh has asked Qualcomm to adopt component-level licensing instead of device-level licensing. The ruling also bars Qualcomm from signing exclusive modem supply deals with customers.

This ruling will make the modem chip market competitive and benefit peers such as Intel and Samsung. Smartphone manufacturers will also be able to procure modems at a lower cost.

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Qualcomm stock has been volatile in the last month

Qualcomm stock rose 50% between April 15 and May 3 this year after it reached a settlement with Apple. In this settlement, Apple agreed to pay Qualcomm a lump sum amount, and the companies signed a six-year licensing deal.

However, the recent escalation of the tariff war and a ban on Huawei drove the stock lower in the last two weeks. Qualcomm stock has now lost 19.5% this month. The stock though is still up by 23% since the start of 2019.

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