A U.S. judge has ruled that top chipmaker Qualcomm Inc unlawfully suppressed its rivals in the smartphone chips market, using threats that it would cut off supplies.
The chip maker, which makes most of its money by licensing its technology to mobile phone companies, also used excessive licensing fees to illegally, U.S. District Judge Lucy Koh said.
The judge’s verdict has the potential to see Qualcomm completely restructure its business practices.
But in the immediate aftermath of the ruling, the company’s shares plunged massively, shedding over 12.5% on Wednesday.
Koh’s 233-page ruling stated in part that “Qualcomm’s licensing practices have strangled competition,” with company’s practices hurting rivals for years.
She noted that the rivals in the chip market, smartphone makers, as well as the general consumer population had been affected by the firm’s practices.
Koh noted in her ruling that Qualcomm utilized “extensive” anticompetitive practices to target more than a dozen companies that have been manufacturing equipment for a long time.
These targeted rivals included Apple, Samsung, BlackBerry, Sony, Huawei, Motorola, Lenovo, and LG. Some of the underhand techniques included threatening, or indeed cutting off-chip supplies, and in other instances, withholding technical support.
The judge then ordered Qualcomm to renegotiate its licensing agreements taking note to do so at reasonable prices. The firm had also to stop using threats of cutting off supplies to get at rivals.
Koh also ordered that the San Diego-based tech giant be closely monitored for the next seven years to make sure that it continues to comply with the orders.
The judge’s orders come months after a 10-day trial that took place in January and comes just over a month since Qualcomm and Apple reached a settlement on a legal battle between the two tech companies in several courts all over the world.
Qualcomm has issued a statement stating that it will ask the judge to put the verdict on hold. The company’s representatives also noted that they appeal the decision in a higher court.
Qualcomm’s counsel Don Rosenberg said that the chip maker did not agree with the judge’s interpretation of facts, her application of the law and her conclusions.