Intel Cites Apple-Qualcomm Settlement as Reason Behind Exiting 5G Smartphone Modem Business

[realtuner]

Reality says otherwise, as Apple was already using Intel chips in place of Qualcomm's for designs Intel was able to successfully deliver, meaning Apple would've happily used a 5G chip from Intel as well. And Apple wound up paying Qualcomm's high license fees anyway as part of their settlement, so why did Apple settle and accept those fees if not because Intel couldn't deliver on a 5G chipset, if it was only about licensing fees as you say?

Apple would use chips from ANYONE who could provide them. Intel, Qualcomm or Samsung. The lawsuit doesn’t change that one bit. Apple could have continued the trial, won their case and got reduced licensing fees, and turned around the next day and signed a new agreement to use Qualcomm 5G modems. Or they could have lost their case and still turned around and used Qualcomm 5G modems.

Apple was under ZERO PRESSURE to settle. They ALWAYS had the option to use Qualcomm 5G modems. The only reason to settle would be if they reached a favorable agreement in line with what they were suing for (different licensing fees).

Apple paid Qualcomm’s “high licensing fees”. I’m calling this statement an outright lie, unless you can provide us with details about how much they settled for. So you have such information? Please do tell.

 

[twolf2919]

Despite the delusional postings here, Apple got pretty much everything they wanted—which never included a hostile takeover of QC—by the settlement:

...
2) Instead of a $20 royalty, QC settled for $8-9—less than they were paying 10 years ago for a 3G SEP license. Huge Apple win
...
The settlement was extremely favorable to Apple, but for those who insist on spinning this as a QC win at Apple’s expense, feel free to believe whatever you wish. One thing that’s certain is that no amount of facts or logic will ever dissuade you.

While I agree with your sentiment, I'm not sure I believe the $20 royalty number. Several publications reported that Apple's royalty was a lot less in exchange for making QC its exclusive supplier. I read different numbers - from $8 to $14. But I never read anywhere that Apple used to pay $20. Please provide a URL to your info.

 

[mithion]

I’m using an iPhone XR and this is significantly better than my 7+ in terms of coverage and latency. I don’t understand the whole Intel vs Qualcomm modem fiasco, it works fine for me and probably for many others.

That's good news! Makes me feel more confident in buying a phone in the fall with an intel chip.

 

[BootsWalking]

Apple would use chips from ANYONE who could provide them. Intel, Qualcomm or Samsung. The lawsuit doesn’t change that one bit. Apple could have continued the trial, won their case and got reduced licensing fees, and turned around the next day and signed a new agreement to use Qualcomm 5G modems. Or they could have lost their case and still turned around and used Qualcomm 5G modems.

Apple was under ZERO PRESSURE to settle. They ALWAYS had the option to use Qualcomm 5G modems. The only reason to settle would be if they reached a favorable agreement in line with what they were suing for (different licensing fees).

Apple paid Qualcomm’s “high licensing fees”. I’m calling this statement an outright lie, unless you can provide us with details about how much they settled for. So you have such information? Please do tell.

That's quite a rosy view you have on Apple's position and leverage vs Qualcomm. However, again, reality says otherwise.

• Apple could have paid Qualcomm between $5 and $6 billion to settle the two companies’ bitter legal battle, according to a new estimate.
• Apple may also be paying Qualcomm between $8 and $9 per iPhone in patent royalty fees.
• The UBS estimate suggests that Apple paid a high price to end the litigation.

Source:
https://www.cnbc.com/2019/04/18/apple-paid-5-billion-to-6-billion-to-settle-with-qualcomm-ubs.html

 

[jdiamond]

Everyone saw it coming, except Intel.

I have a different interpretation. I think Intel and Apple knew for awhile that Intel was not going to be able to get Apple the chips they needed, but they had to stay secret about this, so Apple could use Intel as leverage to negotiate with Qualcomm. That's why the instant the settlement was finalized, Intel could announce they were done. I think it might have been Qualcomm who was surprised by Intel's announcement - they suddenly realized they could have dragged Apple over a barrel.

 

[tridley68]

Apple did good and came out smelling like a Rose.

 

[realtuner]

That's quite a rosy view you have on Apple's position and leverage vs Qualcomm. However, again, reality says otherwise.

• Apple could have paid Qualcomm between $5 and $6 billion to settle the two companies’ bitter legal battle, according to a new estimate.
• Apple may also be paying Qualcomm between $8 and $9 per iPhone in patent royalty fees.
• The UBS estimate suggests that Apple paid a high price to end the litigation.

Source:
https://www.cnbc.com/2019/04/18/apple-paid-5-billion-to-6-billion-to-settle-with-qualcomm-ubs.html

Oh, so NO FACTS at all, just some made-up numbers from some analyst.

I'm still waiting....


Meanwhile, you're conveniently forgetting Qualcomm has lost EVERY SINGLE antitrust case brought against them over modem licensing issues and has paid $4 billion in fines so far. And the FTC case still has to be decided (which should be fairly soon).

Must be nice to ignore FACTS like these and pretend they don't have any bearing at all on a case that was all about Qualcomm's illegal (illegal as they've been found guilt 5 times already) licensing model.

 

[BootsWalking]

Oh, so NO FACTS at all, just some made-up numbers from some analyst.

I'm still waiting....


Meanwhile, you're conveniently forgetting Qualcomm has lost EVERY SINGLE antitrust case brought against them over modem licensing issues and has paid $4 billion in fines so far. And the FTC case still has to be decided (which should be fairly soon).

Must be nice to ignore FACTS like these and pretend they don't have any bearing at all on a case that was all about Qualcomm's illegal (illegal as they've been found guilt 5 times already) licensing model.

Yeah, I'll take an analyst's estimates who studies the industry and talks with its executives and suppliers over some random internet poster who's grasping at straws because he doesn't want look wrong in public. Have a nice day

 

[PickUrPoison]

While I agree with your sentiment, I'm not sure I believe the $20 royalty number. Several publications reported that Apple's royalty was a lot less in exchange for making QC its exclusive supplier. I read different numbers - from $8 to $14. But I never read anywhere that Apple used to pay $20. Please provide a URL to your info.

$13 would be the price to license only the SEP, 3.25% on selling price (capped at $400). However, the rate is 5% for Qualcomm’s full 130,000+ patent portfolio, which is presumably what Apple licensed.

 

[ad1815]

I have a different interpretation. I think Intel and Apple knew for awhile that Intel was not going to be able to get Apple the chips they needed, but they had to stay secret about this, so Apple could use Intel as leverage to negotiate with Qualcomm. That's why the instant the settlement was finalized, Intel could announce they were done. I think it might have been Qualcomm who was surprised by Intel's announcement - they suddenly realized they could have dragged Apple over a barrel.

In other words, intel’s immediate announcement is their way of showing Qualcom middle finger! No matter the truth, thinks this way make me happy!

 

[technole]

I’m using an iPhone XR and this is significantly better than my 7+ in terms of coverage and latency. I don’t understand the whole Intel vs Qualcomm modem fiasco, it works fine for me and probably for many others.

It's a GSM provider isn't it? Could be the simplest thing such as T-Mobile's 600mhz and even ATT adding lower spectrum that penetrates better. GSM is the largest standard so it's natural Intel works good in that regard.

Qualcomm invented CDMA, so I kind of figure the fiasco is mostly related to using that technology on Sprint and Verizon. It kind of makes sense.

 

[realtuner]

Yeah, I'll take an analyst's estimates who studies the industry and talks with its executives and suppliers over some random internet poster who's grasping at straws because he doesn't want look wrong in public. Have a nice day

• The same analyst who claimed Apple was having production difficulties with the "iPhone 8" trying to get the under-screen fingerprint sensor ready? Oops, completely wrong on that one.
• The same analyst who said that the next iPhone was going to cost $50 more because of the curved screens Apple was going to use? Oops again, completely wrong on that one too.

These are two I came up with in only a minute of looking.

Though I can understand your position. When someone lives in the fantasy world where Apple is always wrong/losing, it helps to ignore ACTUAL court cases where Qualcomm was found to be illegally overcharging licensing fees for their modems. Thus you can keep living your fantasy by believing in RUMORS and ignoring FACTS.

 

[ryanwarsaw]

Makes total sense.

Intel expected a large order from Apple, and that order is now going to Qualcomm. That order would probably have been big enough to justify development cost to Intel. Now it's not.



That was prepared. The possible outcomes were: Apple wins and buys Intel chips. Apple wins and buys Qualcomm chips. Qualcomm wins and Apple buys Intel chips. Qualcomm wins and Apple buys Qualcomm chips. They settle and Apple buys Intel chips. They settle and Apple buys Qualcomm chips.

Intel had six press releases ready

Apple gets their 6 year deal and buys Intel's mobile chip division. Just heard on biz news that Apple is in talks with Intel to buy their mobile chip division. My mistake story is on MR now seems talks never went anywhere and then Intel decided to pull the plug on it.

 

[BootsWalking]

• The same analyst who claimed Apple was having production difficulties with the "iPhone 8" trying to get the under-screen fingerprint sensor ready? Oops, completely wrong on that one.
• The same analyst who said that the next iPhone was going to cost $50 more because of the curved screens Apple was going to use? Oops again, completely wrong on that one too.

These are two I came up with in only a minute of looking.

And how exactly did you determine he was wrong on those two calls? You think Apple is going to publicize internal product and design changes they made before the existence of that product is even announced? You think each year Apple ships the exact product they envisioned at the start of its design cycle?

Though I can understand your position. When someone lives in the fantasy world where Apple is always wrong/losing, it helps to ignore ACTUAL court cases where Qualcomm was found to be illegally overcharging licensing fees for their modems. Thus you can keep living your fantasy by believing in RUMORS and ignoring FACTS.

Nobody is disputing Qualcomm's legal troubles and that what they're doing likely violates the law. But Apple wasn't able to take advantage of that were they? If you're so sure Apple would have prevailed then why did they settle the day before their trial was going to start, and for billions of dollars and large licensing fees? You have to be suspended in a pretty strong reality distortion field to believe Apple didn't "lose" against Qualcomm. Apple had zero leverage against Qualcomm.

 

[realtuner]

And how exactly did you determine he was wrong on those two calls? You think Apple is going to publicize internal product and design changes they made before the existence of that product is even announced? You think each year Apple ships the exact product they envisioned at the start of its design cycle?

Say what? An analyst makes a prediction on something and they're 100% wrong, and you use the argument "You think Apple is going to publicize internal product and design changes they made before the existence of that product is even announced"? Seriously? That's EXACTLY what analysts do - they make GUESSES because they DON'T have access to data. Just like this analyst has no idea what Apple and Qualcomm settled on and GUESSED what he think happened.

Nobody is disputing Qualcomm's legal troubles and that what they're doing likely violates the law. But Apple wasn't able to take advantage of that were they? If you're so sure Apple would have prevailed then why did they settle the day before their trial was going to start, and for billions of dollars and large licensing fees? You have to be suspended in a pretty strong reality distortion field to believe Apple didn't "lose" against Qualcomm. Apple had zero leverage against Qualcomm.

You're making the incorrect assumption that Apple lost with literally ZERO FACTS to back up your argument, then take that false assumption to try and argue that Qualcomm's legal troubles didn't affect their settlement with Apple?

I'm losing track of all the logical fallacies in your posts.

 

[BootsWalking]

Say what? An analyst makes a prediction on something and they're 100% wrong, and you use the argument "You think Apple is going to publicize internal product and design changes they made before the existence of that product is even announced"? Seriously? That's EXACTLY what analysts do - they make GUESSES because they DON'T have access to data. Just like this analyst has no idea what Apple and Qualcomm settled on and GUESSED what he think happened.

Yep, that's exactly my argument. So I'll ask again - precisely how do you know he was wrong?

You're making the incorrect assumption that Apple lost with literally ZERO FACTS to back up your argument, then take that false assumption to try and argue that Qualcomm's legal troubles didn't affect their settlement with Apple?

I'm losing track of all the logical fallacies in your posts.

I'm basing my argument on industry sources and analysts, which I quoted. You're basing your argument on your desire for Apple to not have lost. The only argument you've made is that Qualcomm has legal troubles, yet the reality of Apple paying Qualcomm billions in disputed license fees and locking themselves into an exclusive contract with Qualcomm proves otherwise.

If you want some more insight into how precarious Apple's position was then read this:
https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-apple-into-sumbission/

 

[Terrinb]

Despite the delusional postings here, Apple got pretty much everything they wanted—which never included a hostile takeover of QC—by the settlement:

1) Instead of paying the $9+ billion in back royalties owed, QC settled for $5-6 billion. Big Apple win.

2) Instead of a $20 royalty, QC settled for $8-9—less than they were paying 10 years ago for a 3G SEP license. Huge Apple win

3) Apple gets a 6-8 years direct license with QC that they wanted so they could build their own modem—without the BS that QC has previously demanded, like cross-licensing. Exclusivity is likely not required either. Big Apple win.

4) Apple gets a guaranteed supply of 5G modems at a price acceptable to them, and may or may not dual-source through Samsung (I suspect not). QC gets the chip order—as long as they’re reasonably priced they might get 100%—for as long as Apple needs them through a multi-year supply agreement. Both Apple and QC benefit.

5) 100+ legal actions worldwide are ended, a benefit to both.

With their entire business model at stake and their revenue, earnings and stock under pressure, QC had the most to lose from the potential outcome of the trial, and consequently the most to gain from a settlement. Apple was in the driver’s seat. They certainly weren’t crawling to QC on their hands and knees begging for chips after Intel suddenly cancelled their 5G modems as the Apple-hate crowd had theorized—though until this Swan statement that’s exactly what they claimed.

QC wouldn’t sell chips to Apple to support the 2017 models, thinking they could force them to the table, but Apple just gave Intel 100% of their business instead of 50/50 split with QC. Apple COO Jeff Williams testified several months ago that they wanted QC chips, but that QC wouldn’t support them. But suddenly a few weeks ago, things changed. A week before the trial started, Qualcomm’s President said “We’re still in San Diego, they have our phone number. If they call, we’ll support them.” They didn’t want to go through with this trial and they were ready to settle. Game over.

The settlement was extremely favorable to Apple, but for those who insist on spinning this as a QC win at Apple’s expense, feel free to believe whatever you wish. One thing that’s certain is that no amount of facts or logic will ever dissuade you.

I think you got it right. Also the legal battles were mostly going Apple’s way. The judge already made it clear Apple was entitled to the billion dollar credit owed. Qualcomm only was successful in obtaining limited injunctions that were worked around and the injunction in Germany was overturned.

Apple was also going to win on its claims regarding standard essential licensing terms.

If the thoughts regarding what Apple is paying is true Apple pretty much got everything it wanted.

 

[lazard]

Apple would use chips from ANYONE who could provide them. Intel, Qualcomm or Samsung. The lawsuit doesn’t change that one bit. Apple could have continued the trial, won their case and got reduced licensing fees, and turned around the next day and signed a new agreement to use Qualcomm 5G modems. Or they could have lost their case and still turned around and used Qualcomm 5G modems.

Apple was under ZERO PRESSURE to settle. They ALWAYS had the option to use Qualcomm 5G modems. The only reason to settle would be if they reached a favorable agreement in line with what they were suing for (different licensing fees).

Apple paid Qualcomm’s “high licensing fees”. I’m calling this statement an outright lie, unless you can provide us with details about how much they settled for. So you have such information? Please do tell.

Apple had pressure to settle because Intel couldn't develop a working 5G modem and Qualcomm wasn't going to sell them any modems as long as the case was still being tried. Qualcomm has no incentive or need to cave quickly to Apple's demands as you assume in your scenario.

 

[realtuner]

Apple had pressure to settle because Intel couldn't develop a working 5G modem and Qualcomm wasn't going to sell them any modems as long as the case was still being tried. Qualcomm has no incentive or need to cave quickly to Apple's demands as you assume in your scenario.

Where’s your proof Qualcomm wasn’t going to sell Apple modems? You have none.

 

[Shanghaichica]

Well to be honest there was nothing for Intel to do but fold at that state. All the android OEMS use Qualcomm. Apple were large enough to keep them in the business but after Apple went back to Qualcomm there essentially had no other customers for their 5G chips.

 

[FFR]

Despite the delusional postings here, Apple got pretty much everything they wanted—which never included a hostile takeover of QC—by the settlement:

1) Instead of paying the $9+ billion in back royalties owed, QC settled for $5-6 billion. Big Apple win.

2) Instead of a $20 royalty, QC settled for $8-9—less than they were paying 10 years ago for a 3G SEP license. Huge Apple win

3) Apple gets a 6-8 years direct license with QC that they wanted so they could build their own modem—without the BS that QC has previously demanded, like cross-licensing. Exclusivity is likely not required either. Big Apple win.

4) Apple gets a guaranteed supply of 5G modems at a price acceptable to them, and may or may not dual-source through Samsung (I suspect not). QC gets the chip order—as long as they’re reasonably priced they might get 100%—for as long as Apple needs them through a multi-year supply agreement. Both Apple and QC benefit.

5) 100+ legal actions worldwide are ended, a benefit to both.

With their entire business model at stake and their revenue, earnings and stock under pressure, QC had the most to lose from the potential outcome of the trial, and consequently the most to gain from a settlement. Apple was in the driver’s seat. They certainly weren’t crawling to QC on their hands and knees begging for chips after Intel suddenly cancelled their 5G modems as the Apple-hate crowd had theorized—though until this Swan statement that’s exactly what they claimed.

QC wouldn’t sell chips to Apple to support the 2017 models, thinking they could force them to the table, but Apple just gave Intel 100% of their business instead of 50/50 split with QC. Apple COO Jeff Williams testified several months ago that they wanted QC chips, but that QC wouldn’t support them. But suddenly a few weeks ago, things changed. A week before the trial started, Qualcomm’s President said “We’re still in San Diego, they have our phone number. If they call, we’ll support them.” They didn’t want to go through with this trial and they were ready to settle. Game over.

The settlement was extremely favorable to Apple, but for those who insist on spinning this as a QC win at Apple’s expense, feel free to believe whatever you wish. One thing that’s certain is that no amount of facts or logic will ever dissuade you.

Great summary.

Apple got intels lead 5g engineer as well.
https://9to5mac.com/2019/04/28/apple-intel-5g-poach-leader/