Qualcomm slashes profit forecasts as Apple ceases paying iPhone royalties

“Apple Inc has decided to withhold royalty payments to its contract manufacturers that are owed to Qualcomm Inc, until a legal dispute between the companies is resolved, the chipmaker said on Friday,” Anya George Tharakan reports for Reuters. “Qualcomm, the largest maker of chips used in smartphones, said it will not receive royalties from Apple’s contract manufacturers for sales made during the quarter ended March 31.”

“San Diego, California-based Qualcomm also slashed its profit and revenue forecasts for the current quarter, to account for the lost royalty revenue,” Tharakan reports. “Qualcomm’s shares fell 4 percent to $51.06 in premarket trading.”

“Apple sued Qualcomm in January, accusing the company of overcharging for chips and refusing to pay some $1 billion in promised rebates. ‘Without an agreed-upon rate to determine how much is owed, we have suspended payments until the correct amount can be determined by the court,’ an Apple spokesman said via email on Friday,” Tharakan reports. “Qualcomm lowered its forecast for current-quarter adjusted profit to 75-85 cents per share, from 90 cents-$1.15 per share.”

Read more in the full article here.

MacDailyNews Take: The chickens are finally coming home to roost for Qualcomm.

In 2017, Qualcomm’s licensing scam — charging a percentage of the total cost of all components in the phone, even non-Qualcomm components — is unreasonable, illogical, and irrational.

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10 Comments

  1. They are clearly frand patents. Qualcomm is not disputing that. In fact they are asserting that, just as apple is

    On Apple’s side is the fact that that Apple is paying a fixed percentage of the total price of the phone effecting Apple more than any other supplier. This is because apple’s phones have a much higher average price across its product line than other mfrs. They don’t mix in a large quantity of very low end phones as other mfrs do. When you upgrade storage on an iPhone purchase, QC gets more royalty. When Apple adds touchID QC gets more.

    Qualcomm is denying apple their large contractual rebates because apple testified against QC in Samsung’s Korean govt case, QC acknowledges that, and claims apple testimony was untrue in the case and that’s why they their denying the rebates. Apple’s testimony was probably true, but even if it wasn’t that’s no legal justification for this QC action, (as opposed to just telling the judge their version of the truth.) It’s a power play IMO.

    Qualcomm is being sued by US and Korean govt regulators for pretty much the same thing. Which significantly helps apple’s case.

    I believe Apple is completely right on this.

    There’s some concern that the new FTC and justice department personnel placed by by the current White House may be less supportive of their own antitrust lawsuit against QC and apple’s position here.

    1. I could be mistaken, but wouldn’t QC need to offer the patents to the standards body to make it under FRAND terms?

      It may be that is the case, but without reference, it’s just supposition. I’ll leave it to the courts to do their own homework.

  2. KFI AM 640:
    1-844-BUY-RADIO

    Call that number to complain about its lying news segment it perpetrated. It reported that Apple is refusing to pay for Qualcom’s patents which is false. It merely refuses to pay Qualcom for patents that Qualcom does not own.

    You’ll have to leave a message.

    1. Although calling any KFI number such as the one that gave will help to set the record straight, here’s the more direct number.

      Business Line:
      (818) 559-2252

      A lady took my message and actually read me the false headline which I then corrected for her. She will look into it, she said.

    2. While calling the station is a good thing, claiming that qualcomm doesn’t own the patents is just wrong.

      Apple is not disputing that QC owns the patents, they acknowledge that they do. They DO claim, however, that QC is charging absolutely unreasonable prices for those patents, violating the terms of FRAND patents in general.

      The US and Korean govt lawsuits against QC claim the same. And apple is saying that want to withhold payments until the court decides what reasonable payments actually are. (QC is demanding something like $20 per phone, and Apple says it should be more like a dollar per phone)

      Also, Apple is taking this action partly in response to QC’s capricious decision to deny apple it’s large, contractually agreed upon rebates. A position which QC openly acknowledges, in court papers, that they took in retaliation for Apple’s testimony in the Korean Govt law suit against QC

      1. Qualcom is charging Apple for non-Qualcom IPs inside the iPhone. “…harging a percentage of the total cost of all components in the phone, even non-Qualcomm components — is unreasonable, illogical, and irrational.”

  3. The reason apple says that is because QC chargeS apple a percentage of the price of the whole phone.

    The phone includes other ip thus apples claim

    Apple is NOT saying Qualcomm is claiming patents on other ips. Their saying the manner and size of the charge for the (valid) patents are grossly wrong

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