Samsung Electronics challenges Broadcom consent decree

Samsung Electronics has expressed opposition to the voluntary corrective measure proposed by Broadcom for alleged anti-competitive business practices that the Korean company claims led to hundreds of billions of won of losses.

Broadcom sign located in San Jose, California [YONHAP]

Samsung Electronics has expressed opposition to the voluntary corrective measure proposed by Broadcom for alleged anti-competitive business practices that the Korean company claims led to hundreds of billions of won of losses.

Samsung Electronics and other local electronics companies on Wednesday submitted a letter to the Fair Trade Commission (FTC) to call on the regulator to compel Broadcom to reimburse damages in full, according to the FTC and industry sources the same day. Samsung Electronics and others claim the package of corrective measures that involve a 20-billion-won fund for the local companies offered by Broadcom fell far short of the actual damages.

Broadcom is a producer of semiconductor and infrastructure software products — such as WiFi and GPS chipsets — that are key components in smartphones, set-top boxes and other electronic products.

The FTC "has received a letter of opinion from companies damaged by Broadcom," said an FTC source.

The California-based company has been under an antitrust probe since 2021 for alleged fair trade violations, pressuring Samsung Electronics and the other local companies to ink three-year exclusive contracts for the supply of parts.

The contract had Samsung Electronics commit to purchase more than $760 million of Broadcom products per year and pay out the difference should it buy less than the minimum.

Samsung Electronics was prohibited from buying parts from rival companies, and it had to make excess orders to meet the $760 million minimum, which turned into excess inventory. The Korean chipmaker claims that its damages came to hundreds of billions of won.

Due to the extensiveness of the claimed damages, market analysts expected the FTC to fine Broadcom penalty on par with the 1-trillion-won fine imposed on Qualcomm in 2016 for blocking Samsung Electronics from dealing with rival companies.

But the tables turned when Broadcom applied for a consent decree.

A consent decree allows a dispute-prompting company to expeditiously close the case by voluntarily coming up with corrective measures and damages. The process ends quicker than a typical FTC ruling but does not legally bind any party, at least not under the court of law.

Broadcom in January proposed a consent decree that includes a 20-billion-won funding project as well as technical assistance and quality assurance for products produced before March 2022 equipped with its parts.

BY CHO HYUN-SOOK, JEONG JIN-HO AND SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]