Qualcomm is vulnerable in China, and the company knows it.

It remains to be seen, however, how the company's US$150 million public relations gambit to invest in China's mobile ecosystem will actually help diffuse alleged accusations of Qualcomm's monopolistic behavior in China.

The San Diego, California-based mobile chip giant has been coping with anti-monopoly investigations in China since late last year. The allegations of Qualcomm overcharging in China and abusing its market position could lead to record fines of more than US$1 billion. That's bad enough, but even worse for Qualcomm and its investors is that the company could be forced to accept lower royalty payments in its highly profitable licensing business. This generally accounts for about a third of sales and two-thirds of profit.

In fact, during the latest quarterly results' announcement, Qualcomm said some Chinese licensees were under-reporting their sales, acknowledging that the company is in a licensing dispute with another Chinese company. As the situation escalates, other Chinese licensees feel also emboldened, thinking that they, too, can hedge their royalty payments to Qualcomm. All this cuts into Qualcomm's royalty revenue, the chip giant said.

Qualcomm said under-reporting is dragging down its estimates for the reported number of devices being shipped with its chips.

Against that backdrop, Qualcomm late last week announced US$40 million of investment in four Chinese companies -- mostly software and algorithm developers -- and the China Walden Venture Investments, L.P. fund. These five entities are the first beneficiaries of Qualcomm's previously announced US$150 million strategic China Venture fund.

The five winners are: 7Invensun, an eye-tracking solution provider; Chukong Technologies, a mobile entertainment platform provider; inPlug, a smart home device/platform solution provider; Unisound, a voice recognition and processing technology provider; and the China Walden Ventures Investment.

Reaching the right people?

The US$64 billion question is whether Qualcomm's actions will appear in China as just a public relations campaign, or viewed as serious efforts to breach China's mobile ecosystem. If the latter is the case, Qualcomm could hope that its investment activities will go a long way to win rapport from the Chinese mobile industry.

But here's the thing: Is Qualcomm reaching the right people in China? Further, is US$150 million enough to buy goodwill from Chinese authorities?