Apple's legal battle with Qualcomm over excessive smartphone royalties has taken a turn for the worse as several Apple suppliers have officially sided with their key client to allege that Qualcomm has violated two sections of the U.S. antitrust law.
Qualcomm's legal spat with Apple and toxic rhetoric regarding cellular technology licensing agreements has been raging on for six months, and it would seem that the war is now starting to hurt Qualcomm's business.
In an interview with Fortune, Qualcomm CEO Steve Mollenkopf suggested in a more conciliatory tone that his firm's dispute with Apple over potentially billions of dollars in royalties on mobile chipsets should be resolved via an out of court settlement.
“There's not really anything new going on,” he said of the Apple dispute speaking at the Brainstorm Tech conference in Aspen, adding that “those things tend to get to resolved out of court and there's no reason why I wouldn't expect that to be the case here.”
“I don't have an announcement or anything so please don't ask,” the CEO added.
Apple dual-sourced cellular modem chips from both Qualcomm and Intel in about half of new iPhones last year, instead of buying all its chips from Qualcomm.
The Cupertino company also stopped paying its iPhone manufacturers for royalties owed to Qualcomm in April 2017, arguing Qualcomm abused its dominant position for mobile communications chips to charge excessive royalties.
The companies sued each other and Qualcomm a few weeks ago filed a patent infringement lawsuit seeking to have imports of some iPhones and iPads that contain competing mobile communications chips banned from the US.
As that filing will take 18 months to work through the system, iPhones and iPads released this and next year shouldn't be affected.
Apple is expected to up its LTE chip orders from Intel as it looks to distance itself from Qualcomm, reports DigiTimes. Despite inferior performance, Intel has gone from supplying around 30% of iPhone 7 baseband chips in 2016 to 50% in 2017. And experts say it could be supplying over 70% of the baseband products for iPhones by 2018.
Earlier this year, Apple filed a lawsuit against Qualcomm in a California district court for charging unfair prices to license its tech. Qualcomm has since countersued Apple, and withheld around $1 billion in royalty rebates from the iPhone-maker as retaliation for its participation in a Korean Fair Trade Commission investigation.
Given the nature of this feud, don't be surprised to see Apple work to dramatically reduce its reliance on Qualcomm over the next several months. The company recently hired Esin Terzioglu, Qualcomm's VP of Engineering, to head up a new chip project. It's believed they are developing their own, in-house baseband modems.
Source: DigiTimes
Apple has hired Esin Terzioglu, Qualcomm's Vice President of Engineering, to act as the project lead on its wireless system-on-a-chip project, suggesting the Cupertino company could be developing its own baseband modem for iPhone, iPad and iPod touch devices, reports AppleInsider.
Unlike Apple's in-house designed chips, Qualcomm's Snapdragon processors and Samsung's own Exynos chips integrate the CPU, GPU and the LTE modem on the same chip package.
iPhone 7, for instance, uses dedicated LTE modems from both Intel and Qualcomm.
“After an amazing eight years at Qualcomm, it is time for me to move on to my next adventure,” Terzioglu shared the news via his LinkedIn account.
“I feel privileged for the opportunity to continue my career at Apple,” he added.
He is credit as an inventor of many Qualcomm patents.
After joining Qualcomm in August 2009, Terzioglu lead the Qualcomm CDMA Technologies Central Engineering organization. He has a Ph.D. in Electrical Engineering with a Ph.D. minor in Computer Science, both completed at Stanford University.
Apple and Qualcomm are currently embroiled in a $1 billion licensing dispute related to the royalty fees the iPhone maker and other companies pay to Qualcomm for its cellular chips.
According to Axios, the chip maker has asked a US court to force iPhone suppliers to keep paying it royalty fees, while it continues its legal battle with the Cupertino giant.
iPhone modem supplier Qualcomm is countersuing Apple in the U.S. District Court for the Southern District of California, saying the Cupertino company could not have “built the incredible iPhone franchise” without its fundamental cellular technologies. The chip maker accused Apple of contributing “virtually nothing” to the development of core cellular technologies.
Qualcomm and Apple are currently embroiled in a legal spat involving excessive royalties, casting serious doubt on the possibility of a Qualcomm-made LTE modem in a future iPhone. Today, Qualcomm teased a brand new Snapdragon X20 LTE chip, its second-gen Gigabit LTE modem.
It's capable of fiber-like LTE Category 18 downloads of up to 1.2 gigabits per second, or one-fifth faster than the previous X16 chip. Upload speeds go up to a theoretical maximum of 150 megabits per second. It's expected to ship in the first half of 2018.
Only time will tell if Apple plans on dual-sourcing cellular modems from both Qualcomm and Intel, in which case 2018 iPhones could theoretically support faster-than-Gigabit-LTE downlink speeds of up to 150 megabytes per second.
Apple on Friday announced it's suing iPhone modem supplier Qualcomm, which owns many wireless patents, “after years of disagreement over what constitutes a fair and reasonable royalty”. The suit argues Qualcomm withheld nearly $1 billion in payments it owes to Apple as retaliation because Apple cooperated with the Korea Fair Trade Commission. Last month, Korean regulators slapped Qualcomm with a $850 million fine over its patent-licensing practices.
Apple's suit, filed in federal district court in the Southern District of California, accuses Qualcomm of charging royalties for technologies “they have nothing to do with.” Responding to the complaint, Qualcomm called Apple's claims groundless and said they “misrepresented facts”.
Yesterday, the U.S. Federal Trade Commission (FTC) charged Qualcomm with monopolizing baseband modems used in smartphones, basically saying the company bribed Apple into not making a WiMAX iPhone in exchange for better royalties. The chip maker in a subsequent press release denied any wrongdoing, saying the FTC doesn't really understand how the mobile industry works.
Now we know why Apple has made the controversial decision to dual-source baseband modem chips for iPhone 7 from both Intel and Qualcomm. Tuesday, the U.S. Federal Trade Commission (FTC) charged Qualcomm with monopolizing baseband modems used in smartphones, saying the firm's leveraged its position to force Apple to use its baseband chips in exchange for lower patent royalties.
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Bloomberg's Alex Sherman and Ian King reported yesterday that fabless chip designer and Apple supplier Qualcomm could be buying NXP Semiconductors, a global semiconductor and analog circuitry manufacturer headquartered in Eindhoven, The Netherlands.
NXP employs approximately 45,000 people in more than 35 countries and provides chips that give Apple devices features like power-efficient motion tracking and NFC for Apple Pay.
Supply chain whispers recently claimed that a significant portion of LTE cellular modems for the iPhone 7 and iPhone 7 Plus would be built by Intel instead of Qualcomm and now Bloomberg is reporting that Intel modems will be actually reserved for AT&T iPhone 7 models.
Qualcomm is expected to remain Apple's modem provider for Verizon and China-bound iPhone 7 handsets. Qualcomm's boss had said he expected a major customer to diversify its supplier base.