Apple and Qualcomm are entangled in a massive patent royalties dispute. Qualcomm believes it has a right to receive a hefty royalty from Apple for every iPhone sold because of the Qualcomm baseband chip used on iPhones. Apple, naturally, isn’t having any of it.
Back in January, the FTC filed a complaint against Qualcomm for monopolizing the market. Shortly after, Apple filed a $1 billion lawsuit against Qualcomm for wrongly charging royalties towards a tech that in Apple’s words, had nothing to do with Qualcomm.
We are now getting fresh information from both sides thanks to a new Bloomberg interview with Apple SVP Bruce Sewell and quotes from some Qualcomm executives.
Sewell mentions that the baseband chip in question costs Apple $18, while the company also has to pay 5% of the iPhone’s selling price as royalties.
Sewell believes that Apple shouldn’t have to pay more than $4 per device as royalty. Apple believes that it doesn’t have to pay royalties for the sale price of an iPhone, but only for the component supplied by Qualcomm.
Further, documents filed with the court talk about how an Apple executive (possibly Tim Cook) spoke to a Samsung executive (believed to be Vice Chairman Jay Lee) urging the company to mount pressure on South Korean regulators to speed up the antitrust investigation against Qualcomm. Apple, however, denies talking to Samsung about this.
A move like this would potentially force Qualcomm to lower the prices of its chips, thus benefiting Apple and Samsung in the long run. Qualcomm claims this collective plot between Samsung and Apple is anti competitive.
While Qualcomm CEO Steve Mollenkopf remains hopeful that Apple will settle soon, Sewell mentions “there’s no way this case settles, absent a complete reinvention of the licensing model that Qualcomm has adapted in the industry.”
Starting with the iPhone 7, Apple is using baseband chips made by Intel in order to reduce dependency on Qualcomm. The deadlock is likely to continue for a few years until either party settles or the regulatory authority comes up with a distinctive judgment on the matter.