Apple Warns Chinese iPhone Ban Would Force a Settlement With Qualcomm, Result in 'Irreparable Harm' to Apple and Others [Updated]

[dk001]

I still don't understand - How do you stop importing a product into a country - when it's manufactured in that country and then exported out to the rest of the world?

Manufacture for export only. Been doing it in Korea for a while.

 

[tooltalk]

I get this argument and yet I don’t. If it was a Chinese electronics company vs Apple it would make more sense, but they are both American corporations, China aiding Qualcomm doesn’t really “hurt” the US (at least not anymore than China aiding Apple) if Qualcomm wins, an American company will make more money, if Apple wins a different American company will make more money.

In fact Qualcomm winning would probably be bad for Huawei, as they would be forced to pay more to license their phones.

If Qualcomm wins, it's just two American companies exchanging money; business as usual pre-2017. The Chinese regulator already upheld Qualcomm's royalty rates/basis, Huawei would be asked to pay whatever they had agreed to pay, not *more*.

Apple's win, however improbable, on other hand means permanent changes to Qualcomm's licensing model. That means slightly more profit for Apple, but much less net revenue from oversea, especially from Asia where China and South Korea made up 80% of Qualcomm sales in 2017. This is the most desirable outcome for Chinese economy.

 

[bluespark]

Maybe don’t sign licensing agreements that you don’t plan on paying for? Apple knew exactly what they were doing when they accepted Qualcomm’s terms. They are just mad because they don’t want to lose the total $ increase/unit from the % agreement they made when the phone used to be $650 and is now $1000.

This is about patents for such things a resizing photos.

 

[Dammit Cubs]

As a result of the ban, Apple is forced to settle with Qualcomm...

Uh... yeah? That's the idea? That's how things are supposed to end - you're not supposed to just drag things out forever until the other company goes bankrupt, Apple.

Qualcomm is not going bankrupt anytime soon. In fact, a large portion of their portfolio revolves around patents and acquisitions. This is just the world we live in now.

 

[jeremiah256]

Wow, so Apple builds a new campus in Austin for 1 Billion and hires 15k workers...

Meanwhile China got 5 million Apple jobs.

Ahh, what will America look like in the future? A growing population and an ever shrinking supply of jobs. Buckle up, we are headed for a cliff.

"...noting it has created 5 million jobs in China across the supply chain and third-party software developers".

Apple is saying the ripple effect of their business in China has in total created 5M jobs. They are not saying they have 5M Chinese employees on their payroll. Their total number of employees is 130K world wide.

 

[KPandian1]

I still don't understand - How do you stop importing a product into a country - when it's manufactured in that country and then exported out to the rest of the world?

Below is the Wikipedia description that explains how manufacturing is done in China (and India, some African nations), yet the products are have to be "imported" to the same country.

"A special economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI). The benefits a company gains by being in a special economic zone may mean that it can produce and trade goods at a lower price, aimed at being globally competitive. In some countries the zones have been criticized for being little more than labor camps, with workers denied fundamental labor rights."

USA does not have such a zone - a reason why Apple cannot mass produce/assemble its products here.

 

[tooltalk]

I get this argument and yet I don’t. If it was a Chinese electronics company vs Apple it would make more sense, but they are both American corporations, China aiding Qualcomm doesn’t really “hurt” the US (at least not anymore than China aiding Apple) if Qualcomm wins, an American company will make more money, if Apple wins a different American company will make more money.

In fact Qualcomm winning would probably be bad for Huawei, as they would be forced to pay more to license their phones.

If Qualcomm wins, it's just two American companies exchanging money; business as usual pre-2017. The Chinese regulator already upheld Qualcomm's royalty rates/basis, Huawei would be asked to pay whatever they had agreed to pay, not *more*.

Apple's win, however improbable, on other hand means permanent changes to Qualcomm's licensing model. That means slightly more profit for Apple, but much less net revenue from Asia (which made up 80% of Qualcomm sales in 2017). Chinese handset OEMs no longer have to send so much $$$ to Qualcomm in US anymore. This is the most desirable outcome for Chinese economy.
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I was of the opinion that all XR and XS iPhones were running iOS 12 ?

The article claims that all iOS 12 are exempt from any bans.

That is irrelevant. See https://futurumresearch.com/everything-you-need-to-know-about-chinas-iphone-ban/

I heard that this only affected iOS11 phones. Does this mean iOS12 phones are unaffected by this ban?

The injunction makes no mention iOS11 or iOS12, as far as I can tell, so that claim doesn’t really make sense. The matter of iOS11 vs iOS12 appears to be irrelevant to the court and immaterial to the injunction, which are the only two arguments that matter in this entire discussion.

Could Apple theoretically get around this ban by updating all of the affected phones to iOS12?

I don’t know for certain, but I don’t think so.

For starters, I haven’t seen any evidence that iOS12 gets around those patents. (There even appears to be evidence that it does not.)

Second, even if Apple were to unbox all of the phones subject to the PI, update them to iOS12, then rebox them and put them back on the shelf, I don’t believe that would make a difference since, again, the PI doesn’t appear to mention iOS11 or 12. We may find out in the next few weeks if I am right, but I wouldn’t hold my breath.

 

[theMaccer]

"losing hundreds of thousands of dollars in sales tax"

lol

Like it is alot of money

 

[jeremiah256]

If Qualcomm wins, it's just two American companies exchanging money; business as usual pre-2017. The Chinese regulator already upheld Qualcomm's royalty rates/basis, Huawei would be asked to pay whatever they had agreed to pay, not *more*.

Apple's win, however improbable, on other hand means permanent changes to Qualcomm's licensing model. That means slightly more profit for Apple, but much less net revenue from Asia (which made up 80% of Qualcomm sales in 2017). Chinese handset OEMs no longer have to send so much $$$ to Qualcomm in US anymore. This is the most desirable outcome for Chinese economy.
[doublepost=1544763850][/doublepost]

That is irrelevant. See https://futurumresearch.com/everything-you-need-to-know-about-chinas-iphone-ban/

Many Chinese handset manufacturers are in partnership with Qualcomm (see 5G Pioneer Initiative) for the development of the next hot thing, 5G. I'm not sure if there is going to be profit sharing or not in this alliance, so hopefully more is reported.

 

[AustinIllini]

Apple has nothing to worry about. They'll settle and pass the price increase onto the buyer.

But i'm fairly certain I won't spend $1100 on an iPhone again. The XS is still only worth about $800.

 

[genovelle]

Just a ball park on the number that I care about as a consumer. It squeezes in somewhere in the $999 starting price for the Xs.

People seem
To forget the price of this level of phone has not gone up that much. The phone released 11 years ago would have been $850 without subsidies from AT&T. It is nowhere near what it has become now in being a computer in your pocket. When T-Mobile killed subsidies they only made the financing more transparent. Nothing has really changed.

 

[MarkB786]

Good job by Qualcomm not letting Apple screw them. Just took a little more financial pressure for Timbo & Co to cave. Now Apple can get back to where they make the big bucks: Gouging and manipulating their fan base.

 

[genovelle]

Afaik Apple isn't trying to break their contract. The contract expired. They don't want to continue paying Qualcomm under the old terms. They want to renegotiate and they think they're operating from a position of strength. Qualcomm thinks differently.


Just my opinion, but I don't think China gives two whits about the IP case. It just happens to be a convenient leverage point with Trump.

Also, Qualcomm was found to be charging both Apple and their manufacturers for the same license while not doing so with smaller accounts. This amounts to double dipping and violating FRAND by charging inconsistent fees

 

[x-evil-x]

lol, poor apple. Such greed. I upgraded every single year until I got the 8+. After that you’ve never been worth the money.

and the 8+ was? one of the worse upgrades imo ever. 7+ is basically the same phone. 8+ shouldn't of existed

 

[genovelle]

Good job by Qualcomm not letting Apple screw them. Just took a little more financial pressure for Timbo & Co to cave. Now Apple can get back to where they make the big bucks: Gouging and manipulating their fan base.

Great job. Double dipping on their license fees by forcing Apple’s manufacturers to pay for the same license Apple was already paying for.

 

[tooltalk]

You're assuming Huawei would pay.

Huawei makes its own baseband modem and SoC.

?? Huawei too is a customer of Qualcomm. According to IAM, Huawei even "transferred hundreds of patents to Qualcomm months after NDRC settlement talk ..." to negotiate better terms.

Sure, under the current industry practice, anybody can make basebands without any license, but you need license from SEP holders if you sell handsets.

 

[ani4ani]

I guess Qualcomm just loss a good customer. This issue also effects other smart phone makers......

If Apple aren’t paying anything then they haven’t lost anything and remember part of this argument is that Qualcomm also receive license fees for Intel and others modems.

 

[69Mustang]

Also, Qualcomm was found to be charging both Apple and their manufacturers for the same license while not doing so with smaller accounts. This amounts to double dipping and violating FRAND by charging inconsistent fees

What are you talking about? Apple only paid Qualcomm through their contract manufacturers. There was never a direct charge to Apple. Also, entirely irrelevant as it relates to the discussion between me and A. Goldberg. I was only trying to correct an error about Apple's intent, not assess blame to Qualcomm.

 

[tooltalk]

I don't see how it's "desperate." It's actually quite strategic and has a huge multiplier effect.

Qualcomm's main source of revenue is licensing fees. Without Apple sales in China, Apple's revenue would drop by 20%. Qualcomm would take a similar hit.

hate to nitpick, but about 2/3 of Qualcomm's revenue comes from chip sales (QCT), but 3/4 of profit comes from licensing (QTL).

Also remember that while Apple is a big customer, its global mobile phone market share is only ~12%. Let's say China accounts for about 20% of Apple iPhone sales, then it's about 2.4+% sales hit for Qualcomm (or more realistically, 3x ~ 7.5%? considering that Apple's manufacturing cost is probably higher, but not much higher, than other Android handset OEMs). But at this point Apple hasn't paid Qualcomm (indirectly) in a while, so all that is irrelevant...

 

[Solomani]

It is funny to see China actually getting involved with international IP cases. The cynic in me has a uneasy feeling China is doing this to promote their own national phone manufacturers. While iPhones are made in China, they’re not Chinese technology. Shutting down Apple’s sales seems like a good way to boost their own technology firms.

Of course. This issue is sandwiched between a nationalist trade war between an American nationalist government (Trump "America First") and a Chinese ultra-nationalist government (Xi Jinping who wishes to cement his legacy as Mao Zedong version 2.0). Apple and Qualcomm are being used as pawns in this international game.

 

[BvizioN]

Looks like Qualcomm has Apple by the balls.

Looks like the most profitable company in the world will be a tad less profitable.

Not too fast.... take it easy there. Take a deep breath
___________________________________________________________
Apple, push that software update and screw that crazy " ex girelfriend" of yours

 

[tooltalk]

Below is the Wikipedia description that explains how manufacturing is done in China (and India, some African nations), yet the products are have to be "imported" to the same country.

"A special economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI). The benefits a company gains by being in a special economic zone may mean that it can produce and trade goods at a lower price, aimed at being globally competitive. In some countries the zones have been criticized for being little more than labor camps, with workers denied fundamental labor rights."

USA does not have such a zone - a reason why Apple cannot mass produce/assemble its products here.

Are you talking about Free Trade Zones in US. I know there are foreign companies operating/manufacturing out of those zonez in TX. Remember when Tim Cook claimed on WSJ, Bloomberg, etc that Apple used US-made "engine" (A series chips) for iPhone and iPad? They were made by Samsung LSI in Austin, TX. Then, Apple quickly moved it to TSMC in Taiwan not too long after the media tour.
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Not too fast.... take it easy there. Take a deep breath
___________________________________________________________
Apple, push that software update and screw that crazy " ex girelfriend" of yours

Here, found this on finance.yahoo.com. There are apparently 10+ other non-SEPs upheld by the Chinese patent review board (PRB), just laying around at Qualcomm's disposal:

Patent application number / Patent Description / PRB decision

1) 201310491586.1 Card metaphor for activity in computing devices Valid
2) 200480042119.X Mobile terminal and method with ergonomic imaging function Valid
3) 201110165713.X Method and apparatus for wireless network hybrid positioning Partially valid
4) 200980118986.X Method and apparatus for aggregating and presenting data associated with a geographic location Valid
5) 200680016688.6 Method and apparatus for deriving user station seed source locations in a wireless communication system to support helpless GPS type location determination Valid
6) 201310334568.2 System for locating the location of a wireless device Partially valid
7) 201480013124.1 Circuit with high density local interconnect structure and manufacturing method there Valid
8) 200780042026.0 Apparatus and method for linking to an application on a wireless device Valid
9) 200880004304.8 Apparatus and method for locating, tracking, and/or retrieving a wireless communication device Invalid
10) 201180076332.2 Low power integrated circuit for analyzing digitized audio streams Valid
11) 201210390832.X Switch battery charging system and method Valid
12) 200980118088.4 Navigation between various activities in the computing device Invalid

These can be used against Apple at Qualcomm's whim. indefinite preliminary sales injunction! Then, there are probably just as many claims/cases being thrown at Apple in Mannheim, Munich, Germany. Not all are going to succeed, but most will!

 

[MvdM]

Tim Cook shall be visited by three spirits, Past, Present, and Yet to Come . . .

https://mobile.twitter.com/tiny_tim_cook

 

[KPandian1]

Are you talking about Free Trade Zones in US. I know there are a lot of foreign companies operating out of those zonez in TX (eg, Samsung LSI in Austin).

Oh! I didn't know that there were any such kind of zones in the USA.

I am talking about the SEZ - Special Economic Zone; they split hairs with the definitions, how much has to be exported, tax benefits, etc.

SEZ, FTZ, Free Economic Zones, etc. are names used all over the world. The nomenclature differentiates the way these zones operate - some have legit manufacturing/exporting zones.

Some working are described as modern-day slave labor camps, conditions that existed in past centuries.

Interesting - why does the USA need FTZ, SEZ or any such manufacturing zones? Sounds like the labor used for farming, harvesting, food-packing, industries or Mar-a-Lago - immigrant labor of the undocumented kind.

This is a thread in the politics community - so I took the liberty.

 

[pika2000]

I fail to understand the Apple haters supporting Qualcomm. If Qualcomm wins, it spells disaster to Android as well. Qualcomm is pretty much holding Android back. Look at the dismal state of Android wear thanks to Qualcomm doing practically nothing on the chip side. If you guys think Qualcomm has Apple by the balls, well Qualcomm is already squeezing the nuts of Android OEMs. Only Samsung and Huawei have some leverage against Qualcomm, but even they have to use Qualcomm for many of their handsets.