Apple, Qualcomm spat intensifies, manufacturers drawn in

Posted 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 is a major supplier to Apple and Samsung Electronics Co Ltd 005930.KS for modem chips that connect phones to wireless networks.

"Apple is definitely behind this, and certainly what the contract manufacturers would say is the reason they are not paying", said Don Rosenberg, Qualcomm's general counsel.

Qualcomm has already filed a separate claim against Apple for its interference with the license agreements between Qualcomm and these manufacturers. Our license agreements with Apple's manufacturers remain valid and enforceable.

Qualcomm's shares were marginally lower at $55.82 in midday trading, while Apple's shares fell 2.3 percent to $151.85.

This could get ugly, and Qualcomm might see some more 0s and 1s enter its accounts, real soon.

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Um offers that the manufacturers could "file suits against Apple for payment", but risk losing business with Apple. Those contract manufacturers in turn had stopped paying Qualcomm by the same amount.

Qualcomm was little changed at $55.89 at 12:45 NY trading, while Apple dropped 2.2 percent to $152 as broader markets fell amid political turmoil in Washington.

Rosenberg said manufacturers like Foxconn have been put in the middle - they're paying royalties on non-Apple products as they have for a decade or more. While it is not unusual for the companies and other organizations to make such filings, for the briefs to be filed at such an early stage in the process shows the interest the case is garnering in the tech community. Its technology is inside almost every smartphone. "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".

Qualcomm has counter-sued Apple, is appealing the Korea Fair Trade Commission decision and has asked a Northern California federal judge to dismiss the FTC case.