Apple stopped paying Qualcomm royalties in the latest chapter of their lawsuit.

EunSoo · April 28, 2017

Apple has stopped paying and says it won't start paying Qualcomm licensing fees until their global court battle gets resolved. This is the latest step by Apple in their multi-part lawsuit against Qualcomm.

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The legal battle was sparked by the Federal Trade Commission, which began suing Qualcomm for anti-competitive licensing practices back in January. Apple filed suit in California just days later and has since added lawsuits in the UK and China.

"Without an agreed-upon rate to determine how much is owed, we have suspended payments until the correct amount can be determined by the court," an Apple spokesperson told Reuters.

Qualcomm isn’t thrilled about the decision. In a release, Qualcomm general counsel Don Rosenberg says that Apple’s licensing agreements remain “valid and enforceable” and that the company is “improperly interfering” with its agreements.

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As a result, Qualcomm has had to adjust its guidance for how much revenue it expects to make this quarter. Qualcomm initially expected to make between $5.3 billion and $6.1 billion in revenue; it’s now expecting between $4.8 billion and $5.6 billion — a dip of $500 million because of Apple.

- TheVerge

Context:

Qualcomm is a major supplier for 'modem' chips (they connect the phone to wireless networks) to both Apple and Samsung. Those two companies account for 40% of Qualcomm's revenue.

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For Qualcomm, Apple’s move is a further infringement on its legal agreements with the contract makers of the iPhone, who also make devices for other companies. Those agreements predate Apple’s entry into the phone market and are still legally enforceable.

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Qualcomm’s lucrative licensing division funds an industry-leading research-and-development budget, which has helped its chips stay ahead of rivals. That strategy, which has helped the company more than double revenue since 2010, is under threat as the dispute with Apple worsens and it deals with regulatory investigations in the U.S., South Korea, Taiwan and Europe. It says Apple instigated those investigations by making false claims to government agencies. Apple’s end goal is to lower the fees, Qualcomm said.

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When it began it’s suit against Qualcomm in January, Apple accused Qualcomm of monopolizing the market for chips used in wireless devices and withholding $1 billion in retaliation for cooperating with South Korean antitrust authorities. Apple also said it wants back some of the billions of dollars it claims it was overcharged in “Qualcomm’s illegal scheme” to control the market for mobile phone chips. It wants a court to change how Qualcomm charges for its technology.

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Patents controlled by Qualcomm cover the basics of all high-speed data capable mobile phone systems. It charges a percentage of the total selling price of the phone regardless of whether the device uses a Qualcomm chip or not.

- Bloomberg

Sorry for so many quotes, but I think those articles do a much better job explaining the situation than I could do. Anyways, I'm on Apple's side for this dispute but I am intested to see what you guys think of this.

Mira Yurizaki · April 28, 2017

Well, Qualcomm is effectively the Intel of the cellular market in the US, or worse since they have an effective monopoly. Their closest competitor (close being a generous term, it's like saying VIA is a competitor against Intel) was Broadcom, but I think they dropped out.

So yeah. They really need someone to pimp smack them around. Or the rest of the cellular manufacturers need to seed money into another firm. But then again, Qualcomm probably owns like 99% of all the useful cellular related patents.