Qualcomm sues Apple's suppliers for withholding $1B in royalties

Posted May 18, 2017

The legal battle between Apple and Qualcomm has been heating up as the two companies brawl over who has licensing rights to the processor technology.

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.

Manufacturers that build Apple's iPhone and iPad are being drawn in to an escalating dispute between the tech giant and the chipmaker Qualcomm.

The suppliers withheld the royalties at the direction of Apple, which filed a lawsuit against Qualcomm in January for the same amount. Apple has promised to indemnify the manufacturers for any damages resulting from breaching their agreements with Qualcomm.

The other manufacturers listed in the filing by Qualcomm were Pegatron Corp 4938.TW , Wistron Corp 3231.TW and Compal Electronics Inc 2324.TW . "As immersed as the larger dispute between Apple and Qualcomm is in IP, the suit between Qualcomm and Apple's ODMs is about breach of contract due to non-payment which, ironically, is slated to be heard in San Diego, Qualcomm's home town".

Apple sued Qualcomm in January in the US and later in China and the United Kingdom, claiming that Qualcomm abused its monopoly position in cellular chips to impose "onerous, unreasonable and costly" terms on customers and competitors. That complaint deals with Apple's demand that the contract manufacturers refrain from paying Qualcomm.

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Qualcomm's shares were marginally lower at $55.66 in premarket trading.

"We've been trying to reach a licensing agreement with Qualcomm for more than five years but they have refused to negotiate fair terms", Apple said last month.

"We are suing to get our money", Rosenberg said. Apple and other companies claim Qualcomm is charging unfairly high rates in violation of pledges to license inventions that are essential to comply with industry standards.

"Pay for what you take and if you don't want to pay for it, don't take it", he said. The FTC and Apple accused it of abusing its power in the chip business.

Samsung and Intel are cheering on the Federal Trade Commission's lawsuit against smartphone chip maker Qualcomm, alleging the company's anticompetitive practices have created a monopoly, impeded smartphone innovation, and prevented them from competing fairly. A hearing on the dismissal motion is slated for mid-June.