Why Is Qualcomm’s Lawsuit Against Meizu Technology Significant?

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In an effort to decrease the under-reporting of sales in China, Qualcomm took a surprising route by filing a lawsuit against a Chinese smartphone maker – Meizu Technology this time. The smartphone company is being sued for alleged violation of Qualcomm’s intellectual property.  Since February 2015, Qualcomm has been struggling to get Chinese OEMs to comply with the new licensing terms laid out by the Chinese government. The company was accused of monopolistic practices by the NDRC of China and had to pay $975 million and lower its royalty rates in the region as a result of the settlement in 2015. Below we discuss as to why this move by Qualcomm is significant.

Loss_Mesu_tech_Qcom_Q&A

We believe that Qualcomm’s move to file a lawsuit should increase compliance in the region. This move will go out as a clear message for other OEMs in the region, who haven’t yet agreed to comply with the new terms. It is also worth noting that China accounted for 53% of revenues for the company in 2015.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Qualcomm

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