Apple, Qualcomm spat intensifies, manufacturers drawn in

Will Current Headwinds Impact Qualcomm’s Shareholder Returns

Qualcomm Inc. announced today that it has filed a breach of contract complaint against some of Apple Inc.'s top suppliers, which have withheld $1 billion in royalties that Qualcomm says it is owed.

"While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay", Qualcomm said in a statement on Wednesday.

The lawsuit falls short of more drastic moves that media outlets speculated Qualcomm would pursue against Apple - including seeking to ban imports of iPhones and iPads into the U.S.

Qualcomm said the manufacturers have not disputed their contractual obligations, but told the chipmaker they were acting under Apple's orders not to pay. Our license agreements with Apple's manufacturers remain valid and enforceable.

Earlier this year the FTC filed a lawsuit against Qualcomm over alleged antitrust violations.

The fight between Apple and Samsung is getting uglier. The other two companies sued are Wistron Corp. and Compal Electronics Inc.




Qualcomm was little changed at $55.89 at 12:45 p.m.in NY trading, while Apple dropped 2.2 percent to $152 as broader markets fell amid political turmoil in Washington. Qualcomm has separate licensing agreements with the contractors. They have continued to pay royalties for using Qualcomm's patents in non-Apple products, the filing said.

In addition to being one of the world's largest maker of chips for mobile devices, Qualcomm owns thousands of patents on fundamental technology that ensures all phones work.

"We are suing to get our money", Rosenberg said.

Apple joined the assault shortly after the FTC and perhaps has been the most aggressive in maneuvers against Qualcomm, which believes that Apple is behind a "global attack on the company". "You are responsible for paying that". He likened the resistance to pay for the use of Qualcomm technology to someone walking into an Apple store and refusing to pay full price for a smartphone.

Apple and regulators claim Qualcomm abuses its market power to overcharge for "standard-essential patents" and block competition. The companies aren't paying Qualcomm because they are being instructed by Apple not to pay. A hearing is scheduled for June 15, and Koh has set a trial date of January 3, 2019.

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