US chipmaker Qualcomm may be facing a record fine of approximately $1 billion from the Chinese government.
The semiconductor company has been investigated over the past 14 months regarding anti-competitive practices but the huge settlement is expected to bring a close to proceedings.
The fine is expected to be formally announced this week and may also see Qualcomm lower its royalty rates, according to Reuters.
China implemented its anti-monopoly law in 2008 in an attempt to stop businesses from abusing a dominant market position. The National Development and Reform Commission (NDRC), which is tasked with enforcing the regulation, has increasingly been accused of targeting foreign businesses since Xu Kunlin became head of the agency’s anti-trust commission late last year.
"The NDRC will soon release a new antitrust settlement," Xu said earlier today. "Qualcomm will be fined several times the total amount the NDRC fined last year."
The settlement is likely to have a major impact on Qualcomm’s finances, as the firm earned roughly half of its $26.5 billion global revenue from business in China. The NDRC investigation is reported to have already had a disruptive impact, with several licensees refusing to sign new contracts while the probe was ongoing.
The fine is also likely to hinder Qualcomm’s recent attempts to further its position within the Chinese economy. It currently has outstanding investment plans in excess of $150 million, aimed at boosting domestic start-ups.
Although, Xu’s short time in charge of the anti-trust division has been described as intimidating by some, he did stress last year that there was not a campaign against overseas businesses.
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However, that claim is unlikely to hold much water with Qualcomm, which last month had to weather reports that LG was set to launch a lawsuit against the US company if it redesigned its Snapdragon 810 processor.