“We intend to remain a good supplier to Apple even while this dispute continues,” Steven Mollenkopf said in the manufacturer’s first quarter earnings call. “Our preference is to resolve customer disputes with negotiation instead of litigation, so it’s regrettable Apple has taken this path.”
Qualcomm is the world’s largest mobile silicon provider and has its chips in two of the largest manufacturers in the field, Samsung and Apple.
The company expects that the patent licenses in place with its clients will be upheld through the multiple trial processes from not only Apple, but the FTC and against the Korea Fair Trade Commission. All three claim that Qualcomm has been charging more for contracts with source-diversified clients and is said to have threatened the blocking of product shipment and withheld royalties.
To that, Qualcomm comes back with a defense that the practices it is engaged in are common and accepted in its industry and that steadily growing contract rates have been the result of organic innovation and the claimed ability to advance clients’ bottom lines.
“We have never prevented Apple or anybody else from buying from competitive chipmakers,” said executive vice president and general counsel Don Rosenburg.
On Apple’s charge in the Chinese courts that Qualcomm should not be licensing out (industry) standard essential patents for a percentage of unit sales, — i.e., Qualcomm gets 5 percent of the total price of an iPhone just for having a Qualcomm technology essential to running most mobile devices inside it — the San Diego-based company says the practice is industry standard, legal and that the technologies enable Apple to innovate on new features for its products. Furthermore, Qualcomm claims that the royalties generated per device per model is capped at a certain point.
“[There] is clear evidence of vibrant competition across the mobile industry,” said Derek Aberle, president of Qualcomm. “And this environment is enabled by our broad, pro-competitive licensing program.”
Qualcomm will have to start responding to the fines and legal challenges throughout the next few weeks.