Qualcomm files breach of contract complaint against Apple's manufacturers

Fiscal 3Q17 Won’t Be Great for Qualcomm Technology Licensing

Fiscal 3Q17 Won’t Be Great for Qualcomm Technology Licensing

Qualcomm has filed a lawsuit against the main manufacturers of iPhones and iPads, saying they have failed to pay licensing fees on behalf of Apple. Apple says Qualcomm has been abusing its position as the dominant supplier of smartphone modems to charge unreasonably high rates to license its patents. Qualcomm doesn't appreciate missing out on iPhone money and the company has sued no less than four major Apple partners.

Apple also repeated a statement it's given in the past.

"This has been a strategically designed effort to damage us around the world", he said.

Qualcomm's shares were marginally lower at $55.66 in premarket trading. Now, the chipmaker has sued Foxconn and three other contract manufacturer for withholding royalties for patents. Now the fee is calculated as a percentage of the selling price of the phone.

Rosenberg said manufacturers such as Foxconn had been put in the middle - they were paying royalties on nonApple products as they had for a decade or more. The two companies have sued and countersued each other since January. When Apple suspended its royalty payments in April, and it became clear that this would persist, Qualcomm cut its guidance for the current quarter.

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". The South Korea-based manufacturer, still in the midst of its own legal battle against Apple for infringing on iPhone patents, says the San Diego-based semiconductor producer makes it policy to deny licenses that would let competitors build their own chipsets.

Qualcomm says that the companies acknowledge the debts but Apple has told them not to pay. "And we said, that is interesting, but that is between you and Apple".

Qualcomm, which gets the bulk of its profit from licensing revenue, has been under investigation worldwide by regulators over its negotiation tactics. Apple's suit built upon a wave of global resistance to Qualcomm's patent-licensing business that has included investigations and fines in several countries.

The filing claimed the companies have admitted that Apple instructed them to withhold the payments and agreed to indemnify them against any losses or damages incurred by their actions. It was just the royalties on Apple products that were not getting paid. Qualcomm also said that the suppliers have continued to pay royalties for non-Apple products under the same agreements that apply to Apple.

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