Apple, Qualcomm spat intensifies, manufacturers drawn in

Fernando Stephens
May 18, 2017

The companies include Foxconn, Compal, Wistron and Pegatron.

The fight between Apple and Qualcomm is getting uglier.

Qualcomm has accused Apple of "strong arming" the contract manufacturers to stop paying the licensing fees they legally owe Qualcomm, which is a breach of the contract between Qualcomm and the manufacturers.

"Their gripe, their issue, appears to be with Apple", said Don Rosenberg, Qualcomm's general counsel. 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.

The smartphone manufacturers are under pressure from Apple and they need to follow instructions of Apple not to pay to Qualcomm.

The Journal said Qualcomm had suspended royalty payments because it hadn't been able to work out a deal with the chip company. It says Apple is making unreasonable demands for licenses at below-market prices. Now the fee is calculated as a percentage of the selling price of the phone.

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Apple is now engaged with an unusually harsh battle with Qualcomm, one of the key companies that designs internal components for the iPhone.

The chipmaker is suing the companies for the payments themselves and additional damages.

Apple and regulators claim Qualcomm abuses its market power to overcharge for "standard-essential patents" and block competition. These are the firms that assemble the Apple iPhone and Apple iPad devices. "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". With the contractors in turn not paying Qualcomm - at Apple's direction, Qualcomm says - the chipmaker last month was forced to slash third-quarter forecasts because it's unclear when the royalties will be paid.

Prosecutors in a statement confirmed media reports that Germany's Federal Financial Supervisory Authority filed a complaint in 2016 asking prosecutors to investigate executives from the holding company.

The company said it has invested billions in microprocessors that will improve smartphone technology, but can't bring it to bear in the market where Qualcomm's "driven almost all of its competitors out of the premium LTE chipset market".

"What they are saying is Apple is not paying us, so we are not paying you, and Apple has told us not to pay you", said Rosenberg.

Other reports by BadHub

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