Apple, Qualcomm spat intensifies, manufacturers drawn in

Terry Joseph
May 18, 2017

In January, Apple sued Qualcomm for $1 billion alleging that the company has been "charging royalties for technologies they have nothing to do with".

Qualcomm, in its counterclaims to Apple's suit, accused Apple of unlawfully interfering with its agreements with contract manufacturers and of encouraging worldwide regulators to attack it. You have license agreements with us that don't involve Apple.

Qualcomm Inc. has filed suit against FIH Mobile Ltd. and Hon Hai Precision Industry Co., Pegatron Corp., Wistron Corp. and Compal Electronics Inc. "Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined".

The case underscores the influence Apple wields over the companies that make its products and parts for them. These royalties amount to a tax on the manufacturers' use of baseband processors manufactured by Qualcomm's competitors, a tax that excludes these competitors and harms competition.

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In a Friday filing, Samsung said it "cannot sell licensed Exynos chipsets [its own in-house chips] to non-Samsung entities because Qualcomm has refused to license Samsung to make and sell licensed chipsets".

Qualcomm was little changed at $55.89 at 12:45 p.m.in NY trading, while Apple dropped 2.2 percent to $152 as broader markets fell amid political turmoil in Washington. "Moreover, Apple has agreed to indemnify defendants for any damages they may incur as a result of breaching their agreements with Qualcomm, further demonstrating Apple's strong-arm tactics".

"As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company", he added in a statement. He likened the resistance to pay for the use of Qualcomm technology to someone walking into an Apple store and refusing to pay full price for a smartphone. During Qualcomm's earnings call with investors, company President Derek Aberle also dismissed the claims made in Apple's lawsuit, saying that they contain "numerous misstatements and mischaracterizations of our agreements, negotiations and contributions to the industry".

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