Qualcomm (QCOM) is not about to let Apple (AAPL) bully it. Apple filed a suit complaining about Qualcomm’s royalty rates. Qualcomm finally responded by filing an injunction against Apple’s contract manufacturers. The chip giant is demanding that the royalties owed to it get paid.
In January, the FTC filed a complaint alleging that QCOM threatened Apple with higher royalty rates, if Apple were to find another broadband chip supplier. Apple sued QCOM for $1 billion. It also filed a suit in the U.K. and in China (for $140 million).
Apple is playing a dangerous game with Qualcomm. It already makes rich profits, so it is unclear why it wants to negotiate or eliminate royalty payments without alienating Qualcomm. iPhones are high profitable and make a big chunk of Apple’s total revenue. Any successful injunction, should a court rule in favor of Qualcomm, will force Apple to settle.
Apple has no problem paying a fine if it loses but QCOM’s stock will bounce back if the courts back the mobile chip giant.
NXPI Deal
Meanwhile, QCOM is awaiting approval for the NXP Semiconductor deal. It is working with six regulators and expects the deal will close at the end of this year. At the TMT conference, the company addressed the Apple dispute. QCOM said 98 percent of the staff allocated to working with Apple will continue business as usual. 2 percent will work on the dispute.
