(Nov 19): South Korea’s antitrust regulator visited the Seoul offices of Arm Holdings Plc this week as part of ongoing scrutiny of the company’s licensing practices, people familiar with the matter said.
The Korea Fair Trade Commission is conducting the unannounced inspections of Arm as part of an inquiry into its conduct, said the people, who were granted anonymity to discuss a confidential matter.
The move stems in part from a complaint by Qualcomm Inc alleging that Arm is hurting competition by restricting access to its technology after operating an open network for more than 20 years, the people said.
Spokespeople for Arm and Qualcomm declined to comment. A spokesperson for the KFTC declined to comment.
The San Diego chipmaker has also brought its concerns about Arm’s licensing business to the US Federal Trade Commission and European Commission, Bloomberg previously reported.
Qualcomm, the number one maker of chips that run phones, contends that Arm created a heavy reliance on its technology through an open licensing model, which also fostered a thriving chip industry.
See also: Algebris CEO warns of ‘significant’ correction for big AI stocks
Arm, which is based in the UK and majority-owned by SoftBank Group Corp, doesn’t make its own chips. Rather, it sells chip designs and licenses a so-called instruction set — code used by software to communicate with processors. Both chipmakers like Qualcomm and device makers like Apple Inc rely on Arm licences for their products.
Qualcomm is telling competition authorities around the world that that dynamic market is now threatened as Arm restricts access to boost profits through its own chipmaking ambitions, Bloomberg previously reported. Arm has previously said Qualcomm’s complaints to regulators seek to “expand the parties’ ongoing commercial dispute for its own competitive benefit.”
Both companies are trying to position themselves to ride a boom in computing demand — for everything from desktops to AI systems — as the market for smartphone chips, which had fuelled much of their growth in recent years, has become more sluggish.
See also: AI stock rally to overcome bubble concerns, Fidelity says
The two companies are entangled in a legal fight around the world. Qualcomm largely prevailed in a trial late last year over claims by Arm that it breached its licensing agreement and in September, a federal judge ruled in Qualcomm’s favour on the remaining claims. Arm is appealing.
Qualcomm’s complaints to regulators are confidential, but in court filings last year the company said that following Arm’s acquisition by Japan’s SoftBank and the failure of an attempted sale to Nvidia Corp, Arm is acting anti-competitively to pad its bottom line.
The KFTC has the authority under the country’s antimonopoly law to conduct in-person inspections to gather documents and conduct interviews. While the regulator often uses the tactic, it is a sign that they’re stepping up their scrutiny.
Uploaded by Magessan Varatharaja
