Qualcomm Hopes to Defuse Tensions With Apple Through Broadened Use of Lower-Cost Licensing Model

Following a legal battle that's been ongoing between Apple and LTE chipmaker Qualcomm since early 2017, the latter company today announced an initiative aimed at defusing tensions with Apple. Specifically, Qualcomm says it will "broaden" its use of a lower-cost licensing model moving forward (via Reuters).

The move is a response to the FTC's original complaint that Qualcomm was engaging in anticompetitive patent licensing practices in order to remain the dominant supplier of LTE chips for smartphones. Soon after the FTC targeted Qualcomm, Apple sued the supplier, stating that Qualcomm "reinforces its dominance" through exclusionary tactics and high patent licensing fees.


Now, Qualcomm will receive a lower licensing rate when it does business with customers like Apple, Samsung, and Huawei. Qualcomm licensing division head Alex Rogers hopes that this move will eventually resolve its disputes with Apple and one other unnamed company, thought to be Huawei.
“It’s a good context for dealing with the two licensee issues we have now,” Alex Rogers, the head of Qualcomm’s licensing division, told Reuters in an interview, naming Apple but leaving Huawei unnamed as is the company’s policy when a dispute hasn’t become public through a court proceeding.

Rogers did not comment directly on the likelihood of resolving either customer dispute.
Rogers explains that Qualcomm is doing this by "including more technology" in its licensable patents without raising prices. Before, smartphone makers had the chance to buy two sets of Qualcomm patents, representing a "full suite" or a "standard essential" set. While most customers license both bundles to avoid lawsuits, Qualcomm is aiming to ease tensions by both making it easier for companies to license only the low-cost patent set, and by adding 5G wireless network patents to the sets at no additional cost.
“We have not lowered the rate. What we’re doing is including more technology, more (intellectual property) in the offering without increasing the price,” Rogers added
While Qualcomm has made its move at finally ending the long legal dispute with Apple, the Cupertino company has not yet responded to the announcement. Rogers says that both the Apple dispute and reportedly Huawei "are essentially now being handled within the framework of the current programme."

Given the legal dispute between the two companies, a rumor in late 2017 suggested Apple is considering eliminating Qualcomm chips from its future devices, instead relying on Intel and MediaTek. More recently, unnamed sources speaking with Fast Company stated that while Intel will supply Apple with a 70 percent majority of LTE chips for the 2018 iPhones, Qualcomm will still be sourced for the remaining supply.

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20 months ago
Qualcomm is realizing how much money they'd lose, and they're backtracking now.
Rating: 8 Votes
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20 months ago
My Android phones that use ungimped Qualcomm modems provide me with excellent call quality and data transfer even in low signal areas when I’m traveling. My modems in my iPhones, whether they are Intel’s or gimped Qualcomm’s don’t fare as well, unfortunately. They’re not horrible, but they could be better.

So, I feel as an Apple customer I’ve been negatively impacted by this conflict. Since it’s been going on I have seen that I’m not getting the best phone for my money. I would like to see it resolved and for Apple to just get down to providing us the best components they can source. Otherwise why am I paying these premium prices?
Rating: 5 Votes
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20 months ago
Too late. They're going to pay dearly for their shortsighted greedy ways of the past. Wouldn't be surprised if the big 3 eventually dump them.
Rating: 4 Votes
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20 months ago
This change is not sufficient and no more than window dressing. Including "more technology" is not the issue. It is licensing the required FRAND patents at their appropriate valuation and dealing with non-FRAND patents separately.
Rating: 3 Votes
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20 months ago

I bet Apple creates their own 4G/LTE/5G modem chip by 2020 if not before... Maybe Apple will put the FM radio back in, LOL

They'll still have to pay Qualcomm for the use of the patents.
It doesn't matter who builds the physical chips, it's the patents used in the chip that make up the bulk of a chips cost.
Rating: 2 Votes
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20 months ago

You're assuming Apple uses those patents. They could come up with their own design.

How exactly would one work around standard essential patents? Understand, Apple's hypothetical design could be night and day different from QC and Intel's design AND still fall under the SEP's.
Rating: 2 Votes
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20 months ago

They'll still have to pay Qualcomm for the use of the patents.
It doesn't matter who builds the physical chips, it's the patents used in the chip that make up the bulk of a chips cost.

The problem is that they are charging Apple not for the modem/chip in the phone BUT the entire retail price of the phone - my guess- Apple will not go for this deal - they want to pay for parts just like a camera module, battery, etc.
Rating: 2 Votes
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20 months ago

Qualcomm is realizing how much money they'd lose, and they're backtracking now.

I wouldn't call it backtracking per se, more like putting more carrots into the bait.
Basically Qualcomn is still pricing the license at the same price, but they include more things in it (like 5G).

A similar example: the 6th gen iPod Touch. On its original release, the base is 16GB for $199. Today, it's 32GB for $199. One can say Apple is selling a "lower cost" iPod Touch since previously, the 32GB was $249, but the starting price is still $199. You get more for the same a mount of money.
Rating: 1 Votes
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20 months ago

They'll still have to pay Qualcomm for the use of the patents.
It doesn't matter who builds the physical chips, it's the patents used in the chip that make up the bulk of a chips cost.

Yes. I think the benefit Apple will reap from building their own modem is from the fact that it can be integrated onto the same silicon as the processor, rather than having to add a separate chip.
Rating: 1 Votes
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20 months ago

You're assuming Apple uses those patents. They could come up with their own design.

It has nothing to do with chip design.
It has to do with the SEP patients required to operate on any mobile network.
Qualcomm still owns the bulk of them.
Rating: 1 Votes
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