Qualcomm (QCOM) Reveals Explosive Charges Against Apple

In the latest installment of a long-lasting legal and contractual argument, the San Diego-based chipmaker alleges Apple stole trade secrets for the express purpose of helping Intel make cellular chips that could be used in iPhones at lower prices than those charged by Qualcomm.

Qualcomm

Qualcomm Inc (NASDAQ:QCOM) on Tuesday alleged that Apple (NASDAQ:AAPL) stole software and tools to help improve the performance of chip sets provided by Qualcomm competitor Intel (NASDAQ:INTC).

The allegation, made in a planned legal filing with the Superior Court of California, is the most recent episode in a number of suits and counter suits between the two companies spanning the globe. Apple started the legal fight by accusing its former supplier of unfair patent licensing practices while insisting they should pay a fee based only on the value of Qualcomm’s connectivity chips, not the entire device. Qualcomm, the world’s biggest provider of mobile chips and the creator of the technology that’s essential for connecting phones to cellular networks, has in turn accused the iPhone maker of stealing its intellectual property.

The semiconductor giant alleges in its latest suit that despite the fact it gave the software and tools to Apple with strict restrictions on their use, Apple engineers repeatedly provided source code and other confidential information to help Intel’s engineers so they could “improve the sub-par performance of Intel’s chipsets…with the ultimate goal of diverting Qualcomm’s Apple-based business to Intel.”

In fact, tear downs of Apple’s new iPhone XS and XS Max, which were released this month, have so far confirmed that Intel is supplying modem chips. It is worth noting that between 2011 and 2016, Qualcomm was the exclusive modem provider for the iPhone. However, the relationship turned sour last year after Cupertino began mixing Qualcomm and Intel parts. Apple also accused Qualcomm during the same period of overcharging it and refused to pay some $1 billion in promised chip rebates.

Obviously, by dumping Qualcomm’s thin cellular modems, Apple has diversified its partner base, thus eliminating its dependency on a single supplier. On the other hand, while Intel’s modems are fast and definitely cheaper than Qualcomm’s – Intel began supplying modems to Apple from the iPhone 7 onwards – they are not as fast. Sector analysts believe that iPhones with Qualcomm chips perform better than models running on Intel chips and that Intel is not as well prepared for 5G networking as Qualcomm.

Apparently, Apple’s switch back to Intel chips has to do with reduction in materials costs for its iPhones. Earlier this year, Nomura’s Romit Shah said that Cupertino will save more than $100 million in the new iPhone cycle by moving to cheaper Intel modem chip.

Qualcomm’s new complaint against Apple which directly accuses it for engaging “in a years-long campaign of false promises, stealth, and subterfuge designed to steal Qualcomm’s confidential information and trade secrets” asks for damages covering “actual losses, unjust enrichment, lost profits, and/or imposition of a reasonable royalty,” plus punitive damages.

Apple however, rejects the lawsuit telling arstechnica that Qualcomm’s Tuesday filing “does not include any evidence of [its] claims.”

Reference: Bloomberg

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