What happened

Shares of semiconductor giant Qualcomm (NASDAQ:QCOM) plunged sharply on Wednesday, trading 12.1% lower at 1 p.m. EDT. The crash was triggered by U.S. District Judge Lucy Koh issuing a judgment against the company in a high-profile antitrust case.

So what

Two years ago, the Federal Trade Commission sued Qualcomm over its handling of industry-standard technology patents with an alleged eye toward boosting the royalty value of such patents to Qualcomm itself. Earlier this year, analyst firm Kerrisdale Capital argued that Qualcomm might lose half of its market value if that trial closed with the wrong conclusion. Here we are, with Judge Koh finding in the FTC's favor. Market makers were quick to respond with a drastic cut to Qualcomm's current market prices.

A gavel resting on its wooden stand, with a blurred American flag in the background.

Image source: Getty Images.

Now what

Koh argued that Qualcomm has "strangled competition" and harmed everybody from sector rivals to end users in the process. She also said that these unsavory behaviors seem likely to carry on in the next phase of the wireless market, because Qualcomm holds a significant number of standards-setting patents in the fledgling market for 5G devices and networks. The company must now renegotiate many licensing contracts, removing onerous deal terms in order to reach a more competitive market for communications chips. Qualcomm will be monitored for compliance with these requirements over the next seven years.

Qualcomm claims that the judgment is way off base, of course, and plans to appeal the verdict as quickly as possible. Stay tuned for further drama as this important antitrust case evolves. We might still be years and years away from the conclusion.