Displaying items by tag: chipmaker
A prominent Apple executive has testified that Qualcomm refused to let the US technology behemoth use its chip technology in their latest line of iPhones due to an ongoing dispute between the two companies over licensing fees.
The admission was made by Apple COO Jeff Williams, during court proceedings in relation to an antitrust lawsuit filed by the US Federal Trade Commission.
Williams told the court that the global smartphone manufacturer expressed a desire to use both Qualcomm and Intel chips in its 2018 iPhones, but stated that Qualcomm withdrew support for Apple by refusing to sell them chips.
In addition to this, he disclosed that Apple has not been able to reach an agreement with the US chipmaker in relation to a new design since it filed a lawsuit in January 2017, which accused Qualcomm of using anticompetitive licensing tactics.
Williams also detailed the company’s fee negotiations with Qualcomm, noting Apple repeatedly traded exclusivity for a lower chip cost in order to keep the latter’s technology in its devices. Williams said, “We needed their chip supply, and we didn’t have a lot of options.”
Qualcomm has yet to mount its full defence in the litigation proceedings. However, it must be said that the claims made by Williams come in stark contrast to testimony provided by Qualcomm CEO Steve Mollenkopf last week.
Reuters published a report which claimed that the Qualcomm CEO declared that the chipmaker had sought an exclusivity arrangement not to shut out the competition, but instead to ensure it would recoup a $1 billion “incentive payment” made to Apple in 2011 in an effort to help cover technical transition costs incurred in switching chip suppliers from Infineon.
Williams’ statements were also contradicted by comments made by Qualcomm president Cristiano Amon during an earnings call in July 2018 noting the company would gladly be an Apple supplier again if the opportunity presents itself.
Mollenkopf also stressed that there was no reason the pair could not work together again noting that it makes sense that the technology leader in mobile should partner with the product leader.
Qualcomm’s legal spat with Apple could affect its Q4 earnings, the chipmaker disclosed in a regulatory filing seen by Reuters, where it responded to questions from the US Securities and Exchange Commission. The company is set to issue its next quarterly results filing on November 1, revealing its earnings for the fourth quarter.
Revenue for Qualcomm’s CDMA technology business, which makes chips for smartphones including iPhones, has declined and may continue to do so, the company said, in part depending on the extent of Apple’s use of rivals’ modems and the variations of versions that are sold.
Apple has adopted a dual-sourcing approach, whereby some iPhone 7s have been shipped with Intel chips rather than Qualcomm ones, which used to be Apple’s only source.
Apple and Qualcomm are locked in a legal battle, with the iPhone maker objecting to Qualcomm’s business model of requiring partners to sign patent license agreements before purchasing chipsets. Qualcomm is feeling the impact of Apple’s outsourcing since Apple, along with Samsung, accounted for 40 percent of Qualcomm’s revenue in fiscal 2016.
In its Q3 earnings report, Qualcomm said its legal dispute with Apple contributed to a decline of 40 percent in profit for the three months ending June 25. Qualcomm CEO Steve Mollenkopf said to investors on an analyst call that the spat would likely affect Qualcomm’s fiscal Q4 earnings.
The United States International Trade Commission (ITC) has commenced an investigation into Apple, Qualcomm recently announced, to examine whether Apple engaged in unfair trade practices by importing and selling certain mobile electronic devices, including iPhones and iPads that infringe one or more claims of six Qualcomm patents.
The investigation is based on a complaint filed by Qualcomm on July 7, 2017. Qualcomm is requesting that the ITC issue a Limited Exclusion Order to bar importation, and a Cease and Desist Order to bar further sales and marketing in the United States, of iPhones and iPads that use cellular baseband processors other than those supplied by Qualcomm’s affiliates.
In addition to the complaint filed with the ITC, on July 7, Qualcomm filed suit against Apple Inc. in the U.S. District Court for the Southern District of California alleging that Apple infringes the same six patents in the complaint filed in the ITC. Qualcomm has also sued Apple for patent infringement in Germany. That lawsuit, commenced on July 17, 2017, seeks damages and injunctive relief for iPhones imported into or sold in Germany.