Published: Thu, May 18, 2017
Research | By Francis Brooks

Qualcomm sues four Apple contract manufacturers

Qualcomm sues four Apple contract manufacturers

Qualcomm has filed a breach of contract complaint against Foxconn, Pegatron, Wistron, and Compal, MacRumors reported.

In a new move in the on-going dispute between Apple and Qualcomm, the chip supplier has sued four iPhone suppliers directly.

Qualcomm said last month that Apple had chose to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court. Included in a series of charges against Apple, Qualcomm accused the tech titan of interfering "with Qualcomm's long-standing agreements with Qualcomm licensees that manufacture iPhones and iPads for Apple".

Qualcomm in a statement said that the license agreements with the manufacturers in many cases were entered into before Apple sold its first iPhone and Apple is not a party to the agreements.

Apple said that Qualcomm has "refused to negotiate fair terms", and chose to stay paying until a judge can determine how much they should cough up in royalties. The U.S. Federal Trade Commission has also filed a lawsuit alleging that Qualcomm has been imposing unfair licensing terms on manufacturers.

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The case underscores the influence Apple wields over the companies that make its products and parts for them. Further, the defendants are continuing to pay Qualcomm royalties for use of Qualcomm's technology in non-Apple products, under the very same agreements that apply to the Apple products. "And we said, that is interesting, but that is between you and Apple".

Qualcomm's patent-licensing segment in fiscal 2016 contributed roughly 80% of its pretax profit.

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".

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. Its technology is inside almost every smartphone.

In Apple's antitrust lawsuit against Qualcomm, the iPhone maker claimed $1 billion worth of those payments are being withheld as punishment for talking to regulators who were investigating Qualcomm - an allegation the San Diego-based company denies. A hearing on the dismissal motion is slated for mid-June.

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