Feds probes Qualcomm deal covering microchips for autonomous cars

The Federal Trade Commission is expected to open an in-depth probe on Wednesday of Qualcomm’s purchase of an Israeli chipmaker focused on auto safety, according to two people with direct knowledge of the matter.

Qualcomm announced in May that it is buying Autotalks, which makes chips for so-called vehicle-to-everything communications, known as V2X. The technology allows both traditional and self-driving cars to communicate with their surroundings. Qualcomm also offers the technology through its Snapdragon Digital Chassis product for assisted and autonomous driving.

Lengthy antitrust reviews can delay acquisitions by a year or more. The FTC and its sister agency the Department of Justice have been intently focused on corporate consolidation involving emerging technologies, but have fared poorly in court. The FTC this year has failed to block acquisitions by Meta and Microsoft involving the nascent markets of virtual reality and cloud gaming.

The FTC is not the only agency probing the Qualcomm deal. The European Commission last week said it would also need to approve the deal after more than a dozen member states asked it to investigate. The deal would “combine two of the main suppliers of V2X semiconductors in the [European Economic Area],” according to a commission statement.

In order to head off potential concerns about the deal, the companies highlighted support from a number of third parties when announcing the acquisition, including automakers Volkswagen, General Motors and Renault, parts maker Continental and Samsung’s Harman International, a vehicle-to-everything rival.

Still, the deal has faced opposition from anonymous complainants, according to the legal news service Global Competition Review. One of the complainants is chipmaker MediaTek, according to the people, who are not authorized to speak publicly.

“The V2X technology is key to improving road safety, traffic management and reducing CO2 emissions as well as for the deployment of autonomous vehicles,” the European Commission said in its statement. “It is therefore important to ensure that customers such as original equipment manufacturers or infrastructure managers retain access to V2X technology at competitive prices and conditions.”

Autotalks has “highly promising technologies and products for further developing traffic-safety systems in vehicles,” Martijn Snoep, who leads the Dutch antitrust regulator in a statement supporting the European Commission’s review. “As a result of the acquisition, Qualcomm can become so dominant in this area that they can easily push competitors and alternative systems out of the market.”

According to the Dutch agency’s statement, there are two technical standards for microchips used in driving-assistance systems and Autotalks is the only company whose chips are compatible with both. The agency said the deal could “lead to higher prices, reduced quality, or less innovation for traffic-safety systems in vehicles.”

Mlex, an antitrust news service, previously reported that the FTC is planning to open an investigation.

Qualcomm is no stranger to antitrust scrutiny. The company fought a years-long battle with the FTC over how it licenses its cellular communications patents, an essential technology for all mobile phone makers. The FTC contended that Qualcomm used its monopoly control of critical technology to charge anticompetitive licensing fees and block out competing chipmakers. An appeals court ultimately sided with Qualcomm in 2020, ending the case.

Qualcomm declined to comment. Autotalks did not immediately respond to a request for comment. The FTC declined to comment. A spokesperson for MediaTek did not immediately respond for comment.