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$ 1 Billion Lawsuit Filed by Apple Against Chip Supplier Qualcomm


01/23/2017


$ 1 Billion Lawsuit Filed by Apple Against Chip Supplier Qualcomm
Days after the U.S. government accused the chip maker of resorting to anticompetitive tactics to maintain a monopoly over key semiconductors in mobile phones, Apple Inc filed a $1 billion lawsuit against supplier Qualcomm Inc.
 
For "modem" chips that connect phones to wireless networks, Qualcomm is a major supplier to both Apple and Samsung Electronics Co Ltd. In the most recent fiscal year, 40 percent of Qualcomm's $23.5 billion in revenue was accounted for by the two companies together.
 
Apple accused Qualcomm of refusing to pay some $1 billion in promised rebates and of overcharging for chips in the lawsuit filed in U.S. District Court for the Southern District of California. Because of Apple's discussions with South Korea's antitrust regulator, the Korea Fair Trade Commission, Qualcomm withheld the rebates, Apple said in its complaint.
 
"If that were not enough, Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm's release of those payments to Apple. Apple refused," Apple said in its lawsuit.

In a statement, Qualcomm General Counsel Don Rosenberg called Apple's claims were called "baseless" by Qualcomm General Counsel Don Rosenberg in a statement.
 
"Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information," Rosenberg said in the statement.
 
"We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”
 
Standard essential patents, a term used to describe technology that is required to be licensed broadly and on "reasonable" terms, are included in the patents for the chips that are owned by Qualcomm.
 
In order to prevent them from making the chips, Apple accused Qualcomm of refusing to license the technology to other manufacturers, Apple said in the law suit. while requiring Apple to pay a separate licensing fee for the same chips, in a "no license, no chip" policy., Apple also alleged. Apple said that that network carriers were pressurized to not sell or support Apple devices made with Intel chipsets by Qualcomm in addition.
 
For what it called unfair patent licensing practices, the KFTC fined Qualcomm $854 million in December.
 
While the European Union in December 2015 accused it of abusing its market power to thwart rivals, in February 2015, Qualcomm paid a $975 million fine in China.
 
Alleging that Qualcomm impose "onerous" supply and licensing terms on cellphone manufacturers by using its dominant position as a supplier of certain phone chips, the U.S. Federal Trade Commission alleged in a lawsuit filed against Qualcomm. It would contest the FTC complaint, Qualcomm said.
 
Until the release of the iPhone 7 in September, Qualcomm was the sole supplier of modem chips for Apple’s phones.
 
Stacy Rasgon, a senior analyst at Bernstein Research said that Intel Corp supplied about half of the modem chips for the newest models. After the Qualcomm suit was announced, Intel's shares closed up 1 percent at $36.94.
 
It was around this time that Samsung returned to Qualcomm for the Galaxy S7 after the company had switched to using its own internal chips for its Galaxy S6 phones.
 
(Source:www.reuters.com)