Apple’s legal assault on Qualcomm part of iPhone margin grab

“Apple Inc. is piling onto lawsuits that attack the way Qualcomm Inc. licenses technology for mobile phones in a widespread effort to rake back profits in a slowing market,” Ian King and Alex Webb report for Bloomberg.

“The latest suit by Apple, filed Friday, alleges that Qualcomm has unfairly used the power of its patents, which cover the fundamentals of phone systems, and its chip business to prop up its dominant position in the industry. Apple’s legal actions follow regulatory investigations and fines on three continents, including a lawsuit announced last week by the U.S. Federal Trade Commission,” King and Webb reports. “‘It feels like another coordinated attack on Qualcomm,’ said Mike Walkley, an analyst at Canaccord Genuity. The mobile phone business is “a mature industry, they’ve got to get their margins higher.'”

“Apple generally uses two or more suppliers for any given component, creating competition and forcing down prices. But Apple had relied exclusively on Qualcomm’s base-band chips — parts that connect the phone to networks — until the introduction of the iPhone 7 last year, when it switched some versions to modems from Intel Corp.,” King and Webb reports. “Ultimately a straight-up legal fight will take years to play out, according to Canaccord’s Walkley. Apple would much more likely want to settle the case in return for lower rates.”

Read more in the full article here.

MacDailyNews Take: Or Apple’s just sick of getting gouged by Qualcomm.

Qualcomm says Apple’s claims are ‘baseless’ in response to Cupertino’s $1 billion lawsuit – January 21, 2017
Apple sues Qualcomm for $1 billion over onerous licensing practices – January 20, 2017
Qualcomm exec says FTC ‘rushed’ antitrust lawsuit before President-elect Trump’s inauguration – January 19, 2017
FTC alleges Qualcomm forced Apple into iPhone LTE chip deals – January 18, 2017
FTC charges Qualcomm with monopolizing key smartphone chip; alleges extracted exclusivity from Apple in exchange for reduced patent royalties – January 17, 2017
After eating Intel’s mobile lunch, Apple could next devour Qualcomm’s Baseband Processor business – January 20, 2015
Analyst: Apple’s going to dump Intel modems if they keep lagging Qualcomm – December 5, 2016
Yes, Apple is throttling download speeds for iPhone 7 and 7 Plus Verizon and Sprint versions – November 19, 2016
Apple’s modem choices may leave Verizon iPhone users feeling throttled – November 18, 2016
Tests show iPhone 7 Plus models with Qualcomm modem perform significantly better than those with Intel modem – October 20, 2016


  1. “The mobile phone business is ‘a mature industry, they’ve got to get their margins higher.”

    If Apple has got to improve it’s (already stellar) margins, what about the other manufacturers with zero (or even negative) margins?

  2. Apple has previously been involved in legal disputes concerning companies abusing FRAND arrangements. Apple is simply doing what they always do when they encounter FRAND abuse.

    I don’t think that this case is anything to do with protecting iPhone margins, it’s simply that Apple doesn’t like to be ripped off.

    1. With prior reports of Qualcomm chips on iPhone 7s actually being throttled to match Intel’s on iPhone 7s, it does seem to be more a case against FRAND abuse than increasing margins. Depending on whether the refund actually allowed Apple to pay less than they would have if FRAND was properly applied, it may just be a case where Apple wants more competition among its suppliers in hopes of getting better chip prices as that is separate from FRAND licensing fees. In the worst case, should Apple win, FRAND licensing will be applied w/o refunds and Qualcomm will keep prices higher than Intel (or possibly even raise prices) since they have a ‘better’ chip.

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