Apple Wanted to Use Qualcomm Chips for 2018 iPhones, But Qualcomm Wouldn't Sell Them

As the FTC's antitrust trial against Qualcomm continues, Apple's chief operating officer, Jeff Williams, has taken the stand to share details on the terms of Apple's contracts with Qualcomm.

There's no live feed of the trial, but reporters including CNET's Shara Tibken and Florian Mueller of FOSS Patents are attending and sharing details on what Williams has to say.

qualcomm iphone 7
Most interestingly, Williams says that Apple had wanted to use both Qualcomm and Intel chips in the iPhone XS, XS Max, and XR despite the ongoing legal battle between Apple and Qualcomm, but Qualcomm ultimately would not sell it the modems because of the fight.

"The strategy was to dual source in 2018 as well," said Williams. " "We were working toward doing that with Qualcomm, but in the end they would not support us or sell us chips."

Williams went on to explain that after Qualcomm CEO Steve Mollenkopf refused to sell Apple the chips, Apple had to contact Intel CEO Brian Krzanich to supply LTE chips for all of the 2018 iPhones. "We would have loved to continue to have access to Qualcomm's tech," said Williams.

Williams also detailed many of Apple's past interactions with Qualcomm. In 2011, when Apple negotiated a contract to use Qualcomm as a supplier for modems instead of Infineon because of Apple's need for CDMA-compatible chips, Qualcomm demanded a percentage of the iPhone's cost.

The two companies ultimately negotiated a rebate that brought the total royalty fee down to $7.50 per iPhone, though Apple had wanted to pay $1.50 per phone, equivalent to 5 percent of the value of the baseband chip, which was $30. Under the terms of that deal, though, Apple had to agree to a "marketing incentives agreement" to speak out against the WiMax standard that was popular at that time.

With the "marketing incentives agreement," rebates Apple received from Qualcomm would need to be reimbursed should Apple ship a device with a baseband chip from a Qualcomm competitor.

When it came time to renegotiate contracts in 2013, Qualcomm wanted to increase the $7.50 fee by an additional $8–$10, which would have cost Apple upwards of a billion dollars in annual licensing costs. To lower that fee, Qualcomm wanted exclusivity, which Apple accepted because it needed Qualcomm's chips.

Apple accepted the deal, which also prevented the company from challenging the fairness of Qualcomm's royalty rates or inducing others to challenge Qualcomm's licensing terms, which is the position Apple has been stuck in for several years.

Apple was finally able to diversify with the launch of the iPhone 7, the first iPhone to use chips from both Qualcomm and Intel, and it challenged Qualcomm's licensing terms in January 2017 with the launch of the initial Apple v. Qualcomm lawsuit.

Apple and many other Qualcomm partners are involved in Qualcomm's legal battle with the FTC, with the FTC suggesting that Qualcomm has been using anticompetitive tactics to remain the main supplier for baseband processors for smartphones.

The FTC v. Qualcomm trial will be continuing through most of January, so we are likely to hear additional details about Qualcomm and Apple's business practices.

Top Rated Comments

Numbah One Avatar
36 months ago
Why would they be in trouble? They're under no obligation to sell to anyone that's the beauty of a free market.
If a company has a standard-essential patent, they have to grant licenses on fair, reasonable, and non-discriminatory (FRAND) terms. The FTC and other companies are arguing that Qualcomm would not do it. I expect the outcome of this trial would affect all of the other lawsuits swirling around.
Score: 36 Votes (Like | Disagree)
ftaok Avatar
36 months ago
Apple don't want to pay their asking prices. Why would they expect Qualcomm to sell them even more?
The issue is that QCOM's patents have been granted as SEP (standard-essential patent). Because the patent is included in an international standard that everyone has to follow, the patent holder must license the technology at a fair and reasonable rate (FRAND).

This was basically the same thing that Samsung tried to pull on Apple many years ago. QCOM is trying to charge users of the CDMA standard a royalty fee based on the entire cost of the device, as opposed to the cost of the component that actually uses the patent.

Some would argue that QCOM is abusing the fact that their patent is part of a standard and they are not making the patent available at FRAND rates. Some would argue the opposite.

I think Apple would be happy (as happy as a company would be paying a supplier Billions of dollars) if QCOM based the royalty on the cost of the chip $30 as opposed to the cost of the iPhone.
Score: 32 Votes (Like | Disagree)
keysofanxiety Avatar
36 months ago
Apple don't want to pay their asking prices. Why would they expect Qualcomm to sell them even more?
Do you know what an antitrust trial is for?
Score: 30 Votes (Like | Disagree)
KPandian1 Avatar
36 months ago
If this is true - Qualcomm refusing - then it is in a lot of trouble.
iPhone suffers because of Apple is litigious.
iPhone is suffering in its modem ability how? All specs are beyond available spectra.
Score: 25 Votes (Like | Disagree)
Wanted797 Avatar
36 months ago
“Qualcomm wanted to up the $7.50 fee by another $8 to $10,“

What?

Edit: Its been pointed out this is some bad wording. MR might I suggest.

‘Qualcomm wanted to up the $7.50 fee by $8-$10’.
Score: 22 Votes (Like | Disagree)
kennyt72 Avatar
36 months ago
If this is true - Qualcomm refusing - then it is in a lot of trouble.
Why would they be in trouble? They're under no obligation to sell to anyone that's the beauty of a free market.
Score: 18 Votes (Like | Disagree)

Top Stories

affinity designer contour tool

Serif Updates Affinity Photo, Designer, and Publisher With New Tools and Functions

Thursday February 4, 2021 1:58 am PST by
Serif today announced across-the-board updates for its popular suite of Affinity creative apps, including Affinity Photo, Affinity Designer, and the Apple award-winning Affinity Publisher for Mac, all of which were among the first professional creative suites to be optimized for Apple's new M1 chip. "After another year which saw record numbers of people switching to Affinity, it's exciting to...
studio buds family

Beats Studio Buds Debuting Today With Active Noise Cancellation, Stemless Design, and More for $150

Monday June 14, 2021 8:00 am PDT by
We've seen a lot of teasers about the Beats Studio Buds over the past month since they first showed up in Apple's beta software updates, and today they're finally official. The Beats Studio Buds are available to order today in red, white, and black ahead of a June 24 ship date, and they're priced at $149.99. The Studio Buds are the first Beats-branded earbuds to truly compete with AirPods...
maxresdefault

Craig Federighi and Greg Joswiak Discuss iPadOS 15, macOS Monterey, Privacy, Shortcuts on Mac, and More

Saturday June 12, 2021 6:12 am PDT by
As is tradition, Apple executives Craig Federighi and Greg Joswiak joined Daring Fireball's John Gruber in an episode of The Talk Show to discuss several announcements that Apple made over this weeks WWDC, including iPadOS 15, macOS Monterey, and a large focus around privacy. Federighi kicks off the conversation discussing the common architecture, now thanks to Apple silicon, across all of...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
adobe photoshop sketch ipad

Adobe Removing Photoshop Sketch and Illustrator Draw From App Store in July

Saturday June 26, 2021 4:02 pm PDT by
Adobe this week reminded customers that its Photoshop Sketch and Illustrator Draw apps will no longer be available for download on iOS and Android starting July 19. Adobe plans to stop supporting the apps for existing users on January 10, 2022. In a support document, Adobe said users can easily migrate to its Fresco app, which combines many Photoshop Sketch and Illustrator Draw drawing and...
REC ASA CODE2016 20160601 205816 2745

Elon Musk Reportedly Demanded to Become Apple CEO as Part of Potential Tesla Acquisition [Update: Musk Denies]

Friday July 30, 2021 9:04 am PDT by
Tesla CEO Elon Musk reportedly once demanded that he be made Apple CEO in a brief discussion of a potential acquisition with Apple's current CEO, Tim Cook. The claim comes in a new book titled "Power Play: Tesla, Elon Musk and the Bet of the Century," as reviewed by The Los Angeles Times. According to the book, during a 2016 phone call between Musk and Cook that touched on the possibility of ...
homepod feature blue2

Looking to Grab a HomePod Before They're Gone? These Retailers Still Have Stock

Monday March 15, 2021 6:54 am PDT by
Apple last week discontinued the original HomePod, marking just over three years on the market for the full-size smart speaker. If you're looking to purchase the larger HomePod before it's completely gone, there are still some options online today. The biggest retailer with remaining stock on the HomePod is Apple itself, which has the White HomePod for $299.00 on its website. Space Gray is...
september 2021 event ar logo

Apple's September 14 Event Page Features AR Logo on iPhone

Tuesday September 7, 2021 9:23 am PDT by
Apple this morning announced a digital-only event that will be held on Tuesday, September 14, and if you view the event webpage on an iPhone, you can tap on the logo to open up Apple's Safari AR viewer and you'll see the three-dimensional logo move in real-time in the real world. Just open up the event site on an ‌iPhone‌ or iPad and tap right on the logo to open up the AR version. The...
iphone 11 night mode photos

Apple Reveals New Night Mode Photo Feature Exclusive to iPhone 11 Series

Tuesday September 10, 2019 12:23 pm PDT by
Apple today announced the iPhone 11, iPhone 11 Pro, and the iPhone 11 Max, all-new models that boast improved cameras, and specifically, a dramatic new Night Mode photo feature. Last year, Google introduced its impressive Night Sight camera mode, a software-based feature that allows users to take detailed pictures in dark environments using Google Pixel smartphones. Apple's new Night...
iPhone 13 Dummy Thumbnail 2

Kuo: iPhone 13 to Feature LEO Satellite Communications to Make Calls and Texts Without Cellular Coverage

Sunday August 29, 2021 7:39 am PDT by
The iPhone 13 will feature low earth orbit (LEO) satellite communication connectivity to allow users to make calls and send messages in areas without 4G or 5G coverage, according to the reliable analyst Ming-Chi Kuo. In a note to investors, seen by MacRumors, Kuo explained that the iPhone 13 lineup will feature hardware that is able to connect to LEO satellites. If enabled with the relevant...