The EU has taken the trade war in an entirely new direction. There is a good bet that EU China trade relations will improve after the EU fined Qualcomm $272 million.
What’s the heinous crime that Qualcomm committed to deserve such a hefty fine from the EU? The EU has found Qualcomm guilty of “predatory pricing” to block a U.K. rival from the 3G modem market between 2009 and 2011.
The EU regulator said that Qualcomm sold microchips used to power 3G internet dongles to ZTE and Huawei at below cost in a bid to lock out British company Icera out of the market a decade ago.
Qualcomm air-tight defense is that China chose their products not because of price but because rival chipsets were technologically inferior.
Here’s how I know there’s a fairly good chance that this has to do with EU China trade.
China is the world’s biggest cheater on price fixing by way of them being communists. China has been illegally subsidizing hundreds of billions of dollars in all sorts of goods in order to force competition out. How many times has the EU fined China? Zero! I couldn’t find one EU fine against China for anything! In fact, look at this very ruling. ZTE and Huawei are Chinese companies that forced Icera out of the market but the EU isn’t fining China. Instead, the EU is fining a supplier to ZTE and Huawei! Can’t get those communist Chinese mad. In fact, the EU has 19 trade disputes with the US but only 8 trade disputes with China!
China is pursuing a program to eliminate competitors and become the leader in key technological fields (China 2025). The EU needs to realize that state-owned and private companies are instruments for achieving political and military goals. The Europeans have pursued a strategy of appeasement with China in hopes that communist China would deliver on their promises to open up its economy and reduce public subsidies. Instead of focusing on the U.S., the EU needs to go after China. After years of broken promises, Europe needs to wake up and take action against China else it will be gobbled up by them. Many EU countries have already lost most of their manufacturing capacity to China so it’s not like the word gobbled up is overstating the dire situation for EU member countries. But the EU is a globalist organization and President Trump is a nationalist and so these globalists are sticking it to U.S. companies while giving China a free pass.
Qualcomm does not meet the stringent requirements for inclusion in the GST portfolio at this time. Both valuation and growth score low for Qualcomm.