Apple's bitter dispute with Qualcomm not expected to be resolved anytime soon
Stock analysts are starting to chime in on the Apple and Qualcomm fight, with the fight will take at least another year with little impact on Apple's bottom line.
In a research note provided to AppleInsider on Friday, Amit Daryanani of RBC Capital Markets has looked into the matters surrounding the Qualcomm and Apple fight. While the matter is complex, involving several courts and governmental agencies, Daryanani believes that the short term financial risk to Apple is negligible, with the company not likely to see any financial impact for at least a year, if ever.
However, Daryanani called a Qualcomm threat to seek an import ban against the iPhone 7 "interesting," based on the "iPhone 8" design and construction timing. Daryanani believes that Apple is currently "finalizing design and component suppliers" for any new fall iPhones, and legal wrangling now may affect choices made by Apple.
On Thursday, Qualcomm says that it plans to file a complaint with the U.S. International Trade Commission to get iPhone and iPad models using Intel-provided modems blocked from import and sale. Allegedly, the Intel modem in some iPhone 7 family of devices violates six non-standards essential patents held by Qualcomm.
Any embargo that may take place wouldn't be immediate. USITC rulings generally take a year and a half or more, just based on investigation times and agency workloads. Additionally, a ban once awarded can be appealed, or vetoed by the President, so even if awarded by the agency, there is no guarantee that it will be enacted.
The lawsuit that started the battle was filed in January, with Apple accusing Qualcomm of unfair licensing terms. Apple claims that Qualcomm withheld nearly $1 billion in rebates in retaliation for participating in a South Korean antitrust investigation.
Apple alleges Qualcomm abuses its "monopoly power" of the mobile wireless chip market to skirt fair, reasonable and nondiscriminatory (FRAND) patent commitments to charge customers exorbitant royalty rates. Qualcomm also restricts sales of chips to buyers who have agreed to license its patents, a practice Apple refers to as "double-dipping" in two different court filings.
Those accusations mirror certain claims addressed in a U.S. Federal Trade Commission antitrust lawsuit also lodged in January.
In an array of counter-complaints to the government and in several court cases, Qualcomm continues to assert that Apple is in breach of contract, and is further interfering by inducing electronics manufacturers to not pay. Qualcomm asserts that Apple has not suffered tangible injury, antitrust or otherwise, from Qualcomm's business practices.
27 Comments
Qualcomm really has been pushing it's luck.. With the FTC also filing it's own suite, I suspect Qualcomm is in a loosing battle.
I wish Apple would just buy every company that gets in its way. They could, so they should. (That's a great credo for a CEO, by the way: "I can, so I will!")
Then why the headline “iPhones May Be Banned from U.S.” being splattered all over the tech media universe?
"Apple alleges Qualcomm abuses its "monopoly power" of the mobile wireless chip market to skirt fair, reasonable and nondiscriminatory (FRAND) patent commitments to charge customers exorbitant royalty rates." Android devices that have that same Qualcomm LTE tech in it costs as little as $120, and by this I mean LTE-enabled devices from name-brand companies like LG, Motorola, and Samsung that have the Qualcomm CPU in addition to the Qualcomm modem. Or, which is more likely in the case of Samsung LTE tablets - use their own Exynos SOC and modems for which they have to license the standards from Qualcomm. Finally, check Qualcomm's revenues. They are less than $25 billion a year. And they made a lot of stuff - networking equipment, satellite equipment, software and services - in addition to making and licensing modems and CPUs. Considering that Apple sells 250 million smartphones a year, there is no way that Apple is paying Qualcomm very much per device. Remember: Samsung sells like 350 million smartphones a year, and most of those are with Qualcomm CPUs AND modems. In fact, nearly all of the 1.5 billion smartphones sold each year have Qualcomm tech, or has tech that was licensed from Qualcomm, particularly if MediaTek (the manufacturer for the hardware used in nearly all the cheap Chinese and Indian mobile devices) has to pay Qualcomm royalties too, and I would imagine that they do. (The MediaTek chips are cheaper than the Intel ones .. but the Intel ones are much better.) So Apple isn't paying Qualcomm a whole lot. $1 billion a year sounds like a ton, but works out to about $4 an iPhone in return for 2G/3G/LTE capability. By contrast, Apple demanded that Samsung pay them licensing fees of $50 per device over "trade dress" stuff like rounded corners and the shape of app icons. Hopefully Qualcomm's lawyers will remind the judge of that very fact, and ask Apple to explain whether LTE capability is more important to a modern smartphone than trade dress. They would have a hard time claiming so, now that the current and upcoming iPhones look a lot more like the Samsung Galaxy S8 than they do the iPhone 3GS that Apple wanted Samsung to pay $50 a device for the privilege of making devices that looked somewhat similar to.