Feud Between Apple and Qualcomm Continues as Apple Stops Paying iPhone Royalties Completely [Updated]

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Apr 28, 2017.

  1. bobenhaus macrumors 6502a

    Mar 2, 2011
    This looks bad for Apple because it is showing the world they can cause finical instability to other companies with this behavior with holding off on payments. Why cant Apple just keep doing business and let the courts decide the outcome? its not like Apple is hurting for money. I'm telling you other companies are watching this and will decide not to do business with a Apple.
  2. pixelshaders macrumors member

    Jul 6, 2007
    And their SSD on Mac as well
  3. ryanwarsaw macrumors 68020


    Apr 7, 2007
    If you want to stay profitable it is hard to do that these days with out Apple. I think maybe that is the point of this. Having your product inside Apple devices tends to be good for the health of your stock.
  4. bobenhaus macrumors 6502a

    Mar 2, 2011
    Yes tell me you dont feel this situation can be done differently. Apple is acting like a bully and I'm sure others are feeling the same way.
  5. macTW Suspended

    Oct 17, 2016
    Just because you use fancy terms like business model doesn't make it legal or right...
  6. ryanwarsaw macrumors 68020


    Apr 7, 2007
    I am not saying it is right or wrong. Apple will flex it's muscles as it is big enough to do so. There is obviously something that happened where Apple felt the fight got personal. Qualcomm is North Korea compared to Apple.
  7. Relentless Power macrumors Penryn

    Relentless Power

    Jul 12, 2016
    No. Both companies are strong arming each other and bulkying each around. This has been going on for quite some time eventually will come to an end, where neither party will likely be happy with the result.
  8. Zirel Suspended


    Jul 24, 2015
    You are blaming the wrong people, mostly.

    Newer Android versions need newer versions of the Linux kernel, Qualcomm proprietary kernel modules (binary blobs) are needed, but Qualcomm doesn't release them to make OEMs buy new SOCs and don't use the old ones they have stocked up.
  9. Rocketman, Apr 28, 2017
    Last edited: Apr 28, 2017

    Rocketman macrumors 603


    If Apple's position translates to legal rulings, Qualcomm received in effect 4x the revenue they were entitled to, resulting in a 80% refund due plus costs, interest and damages. Wow. Qualcomm has had "magical" numbers for years. I guess this is why.

    At least Apple funded Qualcomm shareholders in advance to bring its growth. SELL! (take profits)
  10. macTW Suspended

    Oct 17, 2016
    Why? Because Apple shouldn't be paying that money in the first place. Qualcomm could refuse to supply parts during the lawsuits, too.

    No company will see this and back away from a deal with Apple. This is insignificant. Plus, any deal with Apple will drive the company forward.

    If you're Apple, this sounds beyond stupid: "I'm in court to reduce royalties I've unfairly been paying. Let's keep paying them while we battle in court."
  11. techwhiz macrumors 6502a

    Feb 22, 2010
    Northern Ca.
    Unless you get.slapped for breach and business interference.
    --- Post Merged, Apr 28, 2017 ---
    Yep, and Qualcomm still gets.paid.
    It is not possible to do CDMA without the fundamental patents that Qualcomm holds.They have the keys that unlock cellular technology.
    Google Viterbi.
  12. loekf macrumors 6502a


    Mar 23, 2015
    Nijmegen, The Netherlands
    It is not that simple it seems:

    Normally you would say a patent is linked to technology. So when a handset maker buys a chip from company Q to support 4G he pays some money for the chip and some money to use the patent. Normally money for the patents is included into the chip price.

    Not with Qualcomm it seems, they want a percentage of the product price and they charge manufacturers who eg make the circuit board as well. Seems like a very greedy way to exploit your technology.
  13. diipii macrumors 6502a

    Dec 6, 2012
    Whatever the issues this is no way to behave. Apple showing its true colours.
  14. gnasher729 macrumors P6


    Nov 25, 2005
    Well, Qualcomm can't do this because Qualcomm isn't building the chips. Other companies have licenses that allow them to build the chips. So Apple _can_ get the chips, no matter what Qualcomm says. I don't know who builds the chips; if Samsung is among them that would make some people's heads explode :)
    --- Post Merged, Apr 28, 2017 ---
    And if you use 100 patents and everyone charges just 1% of the product price then there is a problem.
  15. loekf macrumors 6502a


    Mar 23, 2015
    Nijmegen, The Netherlands
    You mix up ARM and Qualcomm. Qualcomm is fabless, but still sells complete ICs, manufacturered at TSMC or Samsung.

    The catch is that they want a percentage of the price for the complete phone. Whoever agreed to that is a total idiot or it is quite normal for phones. Modem costs are perhaps in the 20 dollar incl analog stuff and atennas range compared to a 500 dollar total BoM.

    It is even worse. If you take a different modem from e.g. Intel. Intels pays patent royalties to Qualcomm. They still want a cut from the sales price.
  16. Glideslope macrumors 603


    Dec 7, 2007
    A quiet place in NY.
    Precisely. It's Qualcomm's ball to drop, IMO. I'm usually not, but I'm with Timmy on this one. :apple:
  17. applelover1016 macrumors regular


    Jun 12, 2013
    it's one of those things I could've sworn I've seen but not sure and wouldn't put my life on it lol. Either way apple isn't charging us 5 times more for anything was my point. As far as the qualcomm stuff goes, Apple pay what you agreed and drop them especially if the intel chips are ready anyway.
  18. justperry macrumors G3


    Aug 10, 2007
    In the core of a black hole.
    A few quotes from http://fortune.com/2016/12/27/qualcomm-korea-antitrust/

  19. GrumpyMom macrumors 604


    Sep 11, 2014
    Ah, thanks for the explanation on Qualcomm. I understood the other situations and didn't necessarily disagree with Apple's position on any of them, I just find it amusing that Apple has so many of these battles go so high profile that once you get bombarded with them on this forum they look like the Taylor Swift of big companies, having tiffs or bitter breaks ups with everyone that do become a bit of a public spectacle. As for why Apple tiffs go so public...they're one of the few big companies around that has something of a personality, in a manner of speaking. And the aura of celebrity bestowed by Steve Jobs doesn't show signs of having died with him. I'm expressing it very poorly but I think you will understand what I'm trying to get at. Anyway, I can't imagine many people outside of industry insiders and business analysts and investors caring about whom Qualcomm fights with. Or IBM. Or any other company with a pretty blah public image. But Apple, Tesla, Disney...they're going to get some attention from the press because they've stirred up interest and some loyalty among the general public.

    It was seeming like lately the only articles where I see Tim happy and smiling and pontificating on the rosy future of Apple, it's the ones involving news about its business in China and to a lesser extent, India. Right now there's a happy news one about Didi.
  20. ryanwarsaw, Apr 28, 2017
    Last edited: Apr 28, 2017

    ryanwarsaw macrumors 68020


    Apr 7, 2007
    The case isn't as hard as it sounds. Apple can with hold payment until the court decides what fair compensation is for Qualcomm.
    --- Post Merged, Apr 28, 2017 ---
    Running Apple and getting the best prices and deals from suppliers might be a little more stressful than one would imagine. Imagine having to go to China and making deals all the time. Though most of us on MR could drive harder bargains in our sleep obviously.

    It's a big tough world and the gloves have come off on this one. Apple could buy Qualcomm if they wanted to.
  21. agsystems, Apr 28, 2017
    Last edited: Apr 28, 2017

    agsystems macrumors 6502a

    Aug 1, 2013
    Agreed...for ages, Qualcomm has had a monopoly - they are getting exactly what's coming
    I bet the fees to Intel will be way less - btw- I am not under some illusion that once Apple pays fewer fees, we as consumers will see any price drop.
    --- Post Merged, Apr 28, 2017 ---
    dude its worst than that..."It charges a percentage of the total selling price of the phone regardless of whether the device uses a Qualcomm chip or not."
  22. ApfelKuchen macrumors 68030

    Aug 28, 2012
    Between the coasts
    I think the reason, in this case, is that the royalty is based on the selling price of the phones, not the price of the chips. This means the royalty cannot be automatically calculated by the chip fab. Apple likely has to report the selling price to the chip fab (information they'd rather not divulge, of course) so that the fab can then calculate the royalty. Under the circumstances it's completely understandable that the royalty would be a separate line item on the invoice.

    If the royalty was a flat, per-chip percentage, then it would be this simple.

    I don't know what's typical these days, though I suspect most patent holders don't have the leverage to demand royalties based on the selling price of the final goods. Apparently, Qualcomm has been particularly aggressive in exploiting its leverage. So much so, that various government agencies around the world (including the US Federal Trade Commission) have found those practices to be anti-competitive. Now, those agencies generally don't take action unless "consumers" complain to the agency. Considering how long it can take the wheels of government agencies to turn, the dispute over Qualcomm's royalty practices has probably been simmering for many years.

    At the moment, yes. However, since Apple claims that Qualcomm owes them $1 billion in rebates, there's a bit of money in the bank.

    Or perhaps Apple can get Qualcomm's executives arrested for withholding that $1 billion?

    The reason neither side can call the police is that this is a matter of civil law (contract and or patent violations), not criminal law.

    Disputes like this are always more complex than the media is able to report. Who knows who really fired the first shot? Here's my speculative "take:"

    Apple enters the cell phone business as a new, small player. They don't have the leverage to demand better license terms from Qualcomm, no matter how much they dislike those terms (imagine how Steve might have felt about divulging those sales figures).

    iPhone becomes a huge success, Apple gains leverage, and is not shy about applying that leverage. It begs the question, did Apple negotiate those rebates from Qualcomm, or are rebates available to any major customer? If it was a special deal with Apple, it's likely that Qualcomm hasn't been exactly happy with Apple.

    One thing seems likely, which is that, if the currently-due rebate is $1 billion, the actual royalty rate per phone has to be pretty steep. Is the rebate on the sale of 100 million iPhones? 200 million? If so, that's a rebate of $5-$10 per phone. That can pay for a fair amount of component upgrades in other parts of the phone while maintaining the current price point (or, yes, more money in Apple's pocket, depending on what you think of Apple's motives).
  23. ryanwarsaw macrumors 68020


    Apr 7, 2007
    I can guarantee that if the prices go up it will be passed on if that makes sense. If Apple ultimately loses this law suit we all know it won't be Apple that pays the judgement.
  24. apolloa, Apr 28, 2017
    Last edited: Apr 28, 2017

    apolloa macrumors G4

    Oct 21, 2008
    Time, because it rules EVERYTHING!
    That's it Apple, do your usual childish bully behaviour and just stop paying anyone for their components and technology you are using and personally making billions in profit from...

    Apple really really really is the cry baby pathetic corporation of the world.
    When Jobs claimed they had patented the hell out of it, he meant we will screw the hell out of all our supplier for it.

    I have lost any sympathy for Apple and it's royalty and parent cases since it tried to screw over Ericsson, one of the founding companies of cellphones across the planet, and the fact they went crying to the US president when their products were banned from sale by a US court! Sums them up perfectly that does.
  25. shareef777 Suspended


    Jul 26, 2005
    Chicago, IL
    Even now. That's why the iPhone 6+/6s+/7+ always sell out well before the non + variants on release and take longer to replenish. Specifically for the latest (7/7+), the only version of the 7 to sell out was the Jet Black (the other colors were readily available the day of release), and that was due to manufacturing difficulties. Where-as the 7+ all sold out within minutes.

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