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Qualcomm ramps litigation frenzy even further

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After Apple stopped the flow of cash into the Qualcomm pockets, the chip maker seems to be trying to fall out with everyone else too as it drags another four organizations into the courtroom.

Maybe it wants to reduce the number of birthday presents it has to buy throughout the year, or it feels its lawyers just haven’t had enough to do recently, but Qualcomm is doing its best to p*ss everyone off. The latest chapter in its ongoing battle with Apple is to take its contract manufacturer’s to court to demand the payment of royalties for using its designs in iPhones.

Foxconn, Pegatron, Wistron, and Compal Electronics will all find themselves in the courts primarily because they have been caught in the middle of an argument between mummy and daddy. Apple has forbid its contractors from paying Qualcomm it a clever and underhanded move which is unique to the iPhone supply chain.

Other smartphone manufacturers has direct relationships with Qualcomm, but Apple has put its contractors in the middle. The supply chain has given Apple a bit of an advantage in the legal battle as it is an added complication for Qualcomm if it is to chase down the royalties. It also puts the contractors in a difficult position; do they disobey Apple and potentially lose the contract in the long-term, or refuse to pay Qualcomm and lose out on a pretty critical component in the iPhone.

Apple seems happy to throw its contractors into the line of, as long as it can supply the cult-like army of iLifers with an expensive phone which is driven by the perception of a desirable brand, as opposed to any technological superiority. What you essentially have is a company which relies on narcissistic and self-indulgent consumers and business model which uses suppliers as a shield against on-going fire in legal disputes.

Qualcomm isn’t exactly helping itself though, however it is going up against a crafty and cut-through machine. But perhaps the chipmaker has seen the bigger picture.

Firstly there is the risk of precedent. If Apple wins this legal dispute, the number of doors which could be opened are not worth thinking about. The licensing model could be under threat, and the healthy profits which Qualcomm currently sits on could be destroyed.

Secondly there is the risk of competition. Qualcomm has risen to the top (or at least top three) of the chipmaker world due to favourable conditions in standards which define the 3G and 4G worlds. Perhaps the threat of openness and increased competition in the 5G era is forcing the hand of Qualcomm; get as much cash as possible now, as there is a very-real threat of a smaller slice of the pie in the next couple of years.

Aside from this lawsuit, and the larger battle roaring on against Apple, Qualcomm has also found itself up against one of its biggest competitors in Intel, as well as another of its major customers in Samsung. The pair filed amicus briefs last week, backing the Federal Trade Commission’s complaints against the chip giant, another on-going legal battle. It has also been forced to repay $815 million owing to royalties Blackberry overpaid between 2010 and 2015, as well as another $850 fine from Korean Fair Trade Commission for violating antitrust laws. The lawyers are certainly getting a workout.

Either way, Qualcomm is not going to be on many people’s Christmas card lists if it carries on this way.


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