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MarketScreener Homepage  >  Equities  >  KOREA EXCHANGE  >  Samsung Electronics Co Ltd    A005930   KR7005930003

SAMSUNG ELECTRONICS CO LTD

(A005930)
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Qualcomm to appeal record South Korean anti-trust fine

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12/04/2019 | 01:26am EST
A Qualcomm sign is pictured at Mobile World Congress (MWC) in Shanghai

Qualcomm said it would appeal a South Korean court decision on Wednesday to uphold a record $873 million fine against the U.S. chip giant for unfair business practices related to patent licensing and modem chip sales.

The ruling by the Seoul High Court is a setback for Qualcomm as it battles customers over royalties and antitrust violations around the world, including an ongoing case brought by the U.S. Federal Trade Commission.

Judge Noh Tae-ak rejected the company's appeal against the penalty imposed by the Korea Fair Trade Commission (KFTC) in 2016, saying Qualcomm had abused its dominant market position.

"The defendant exerted a significant influence over mobile phone manufacturers either through unfair relationships or making them depend on the defendant's supplies of modem chipsets," Noh said in his ruling.

The court also confirmed some remedies proposed by the KFTC, including an order for Qualcomm to stop discriminating against rivals who sought to use its essential mobile patent and develop competing modem chips to supply smartphone makers.

The court however dismissed the regulator's claims that Qualcomm had disadvantaged smartphone makers by signing "comprehensive" licensing deals, opening the door for the company to continue taking a cut of the price of the phone as a licence fee.

"We disagree with the court's decision to accept parts of the KFTC order and will immediately seek to appeal those provisions to the Korea Supreme Court," Qualcomm Executive Vice President Don Rosenberg said in a statement.

Qualcomm said it was "gratified" the court had reversed the KFTC's order to renegotiate the licensing terms.

The regulator declined to comment on whether it would lodge an appeal of its own.

Qualcomm is the world's biggest supplier of mobile phone chips and derives most of its profit from a business segment that invents technologies and licenses them.

The company forecast between $1.3 billion and $1.5 billion in revenue for that segment for its fiscal first quarter, above analyst expectations, according to IBES data from Refinitiv.

Qualcomm's chips are essential components in many mobile devices and it is a top supplier to South Korean smartphone makers Samsung Electronics and LG Electronics, as well as Apple Inc .

In a sign it retained its strong market position even after the KFTC ruling, Qualcomm has since extended its strategic relationship with global smartphone leader Samsung and in August entered into a new five-year patent licence agreement with LG.

"This ruling will not really affect or weaken Qualcomm's status in the market, because we are heading into the 5G era and Qualcomm is one of a very few companies that can manufacture 5G modem chips," said Park Sung-soon, an analyst at Cape Investment and Securities.

"Handset makers and telecom companies will still have to heavily rely on Qualcomm's products regardless of its supposedly unfair business practice."

(Reporting by Heekyong Yang; additional reporting by Stephen Nellis; Writing by Ju-min Park; Editing by Stephen Coates)

By Heekyong Yang

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. -2.82% 309.19 Delayed Quote.8.40%
LG ELECTRONICS INC. End-of-day quote.
QUALCOMM -2.62% 87.25 Delayed Quote.1.61%
SAMSUNG ELECTRONICS CO LTD End-of-day quote.
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Financials (KRW)
Sales 2019 230 258 B
EBIT 2019 27 644 B
Net income 2019 21 646 B
Finance 2019 89 956 B
Yield 2019 2,34%
P/E ratio 2019 18,5x
P/E ratio 2020 13,4x
EV / Sales2019 1 756x
EV / Sales2020 1 600x
Capitalization 404 354 B
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 38
Average target price 67 415,79  KRW
Last Close Price 60 800,00  KRW
Spread / Highest target 26,6%
Spread / Average Target 10,9%
Spread / Lowest Target -19,4%
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Hyun-Suk Kim Co-President, Co-CEO & Director
Dongjin Koh Co-President, Co-CEO & Director
Kinam Kim President, Co-CEO & Director
Tae Moon Roh Co-President & Head-Research & Development
Sang-Hoon Lee Chairman
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