Apple to halt royalty payments to Qualcomm until end of ongoing legal battle
Apple is no longer paying iPhone manufacturers for any of the royalties it owes to Qualcomm, and is planning to withhold them entirely until current lawsuits are resolved, the latter company said on Friday.
As a result Qualcomm had to cut its revenue forecast for the current quarter by $500 million, to between $4.8 billion and $5.6 billion, according to Forbes. Qualcomm's licensing deals for the iPhone are techncially with Apple's manufacturers, who pass the costs along to their client.
Earlier this month Qualcomm indicated that those manufacturers were withholding payments, and that it would impact upcoming financials. At the time however it didn't have specific numbers.
"Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade," said Qualcomm general counsel Don Rosenberg in an official statement.
"Apple's continued interference with Qualcomm's agreements to which Apple is not a party is wrongful and the latest step in Apple's global attack on Qualcomm. We will continue vigorously to defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry."
In January, Apple filed a $1 billion lawsuit against Qualcomm, accusing it of abusing its market dominance to obtain unfair royalties, and forcing chip buyers to accept patent licenses. Earlier this month Qualcomm launched a countersuit, arguing that Apple broke contract and really wants to pay less than fair market value for patents.
Prior to now Apple was already withholding approximately $1 billion in earlier royalty payments dating to 2016 sales, but Qualcomm prevented this from seriously impacting its financials by withholding money it owed Apple under a cooperation agreement that ended last year.