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Qualcomm takes aim at Apple’s sensitive area

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What started out as a bit of corporate chest thumping is now escalating to global threats, as Qualcomm is now reportedly grooming a US trade agency to ban the imports of iPhones.

After Apple hit Qualcomm in its sensitive area (its wallet; get your mind out of the gutter), by disrupting the chipmaker’s supply chain, Qualcomm is looking to do the same. According to sources close to Bloomberg, Qualcomm is lobbying the International Trade Commission to block iPhone shipments, which is currently manufactured in Asia, into the US.

It’s an interesting move from Qualcomm, although neither party has confirmed the reports to date, as it would certainly catch the attention of Apple execs. The iLeader reported its quarterly figures recently, with the Americas accounting for $21.157 billion. The numbers themselves haven’t been split into product/region specifics, but considering the iPhone accounts for roughly 60% of revenues, any block would be an unthinkable loss for Apple.

In a battle which is continuing to escalate, there doesn’t seem to be any likely winner. Both would appear to be happy to sustain losses in a quest to get the upper hand on the negotiating table, should there be any way the professional relationship can be salvaged in the long run. That scenario does not look likely however, and Qualcomm’s competitors must be eagerly awaiting the opportunity to jump on such a lucrative contract.

The rewards and losses have already been put on the table. Following Apple’s actions to limit the ability for suppliers to pay Qualcomm, the chipmaker reduced the revenue outlook this quarter by $500 million citing the loss of Apple licensing fees as the reason. Whether Qualcomm is able to block the iPhone’s entry into the states remains to be seen, however it does look like this relationship has taken a permanent turn for the worse.

Elsewhere in the Apple world, CEO Tim Cook has promised to start a new $1 billion fund which will bring manufacturing jobs back to the US. Speaking to CNBC, Cook said the first investment would be announced in May, as the company targets advanced manufacturing jobs in the country.

The move itself is a convenient little nudge to the White House ahead of the upcoming battle with Qualcomm. We’re not saying a $1 billion investment would have any sort of influence in other legal or regulatory matters, after all, politicians are some of the most honest people on the planet, but it considering the size of the Qualcomm foe, it certainly would hurt to have President Trump favouring your corner.

On the campaign trail, one of Trump’s key messages was his intention to bring manufacturing jobs back to the US, and hold big business responsible for creating the gap. While appealing to the responsibilities of American businesses to support the American people gained the support of the electorate, it would appear executives were more attracted to the financial gains of the proposition.

As part of the initiative to bring business back to the US, Trump had promised certain tax incentives to the multinationals. While such a deal will probably never reach public knowledge, it would be a reasonable bet to assume Apple is getting some sort of deal on the condition it stimulates some sort of employment momentum.

Executives are not sentimental. If you want to appeal to them, the promise of the American dream will not work; promising them more money is the carrot. It can also be the stick, as both Apple and Qualcomm are finding out as they attempt to hit where it hurts the most; their bank accounts.


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