Apple and Qualcomm row starts to cause collateral damage

The rather public spat between Qualcomm and Apple has been stepped up another level today, as the iLeader choked the ability of its own suppliers to pay Qualcomm.

Apple has informed Qualcomm it will be withholding payments from contract manufacturers such as Foxconn as the royalty row hits new heights. Up to this point, the two tech giants had traded blows with each other, but now the violence is expanding as innocent suppliers get caught up in the mess.

Over the course of the last few months, the pair have traded blows accusing each other of lying, making threats and harbour monopolistic ambitions. Apple claimed Qualcomm abused its dominant position, though as Apple is in the unusual position of not having a direct contract with Qualcomm, the chipmaker has told it to mind its own business. It’s a disjointed, dysfunction relationship which seemed to work until recently, but it would appear there is no going back now.

It’s also a tricky position for the suppliers; with both hands feeding them, which one should be bitten? On one side they are dependent on Apple for contracts, however to honour those contracts they are dependent on Qualcomm intellectual property. It’s a lovely catch-22 situation, and you have to feel a bit sorry for a few of them.

“Apple is improperly interfering with Qualcomm’s long-standing agreements with Qualcomm’s licensees,” said Don Rosenberg, General Counsel at Qualcomm.  “These license agreements remain valid and enforceable.  While Apple has acknowledged that payment is owed for the use of Qualcomm’s valuable intellectual property, it nevertheless continues to interfere with our contracts.”

“Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade.  Apple’s continued interference with Qualcomm’s agreements to which Apple is not a party is wrongful and the latest step in Apple’s global attack on Qualcomm. We will continue vigorously.”

Although the battle has been intensifying, it would appear Qualcomm was confident of getting some readies out of the deal, but no longer. Following Apple’s announcement, Qualcomm cut its financial forecasts range from $5.3 billion to $6.1 billion to $4.8 billion to $5.6 billion, which also saw a decline in the share price. At the time of writing share price dipped 3.5%.

It is difficult to pick sides between two organizations which are showing their ugly side as greedy executives claw for a few extra dollars to fund their bonuses.