U.S. Markets closed

Qualcomm Countersues Apple Over Holding Back Most Advanced Chips

Parth Panchal

Wireless chip giant Qualcomm QCOM is countersuing Apple AAPL in a dispute over licensing fees for mobile technology. This follows Apple’s original lawsuit from January that claimed Qualcomm owes $1 billion in ‘rebates.’

Being the leading maker of processing chips in mobile phones, Qualcomm earns revenues through the chips themselves, but also on royalties when any device with their chips is sold; a third of their revenues comes from licensing.

As the heat builds, Qualcomm alleges Apple purposely held back its most advanced chip features in the iPhone 7. The countersuit explains that Apple breached agreements and negotiations with Qualcomm.

Since 2010, iPhones have solely implemented Qualcomm chips. That’s until 2017, when some versions of the iPhone 7 have parts from Intel INTC. Qualcomm chips and Intel chips have performance differences. To fill the gap, Qualcomm claims Apple created “artificial parity between the Qualcomm-based iPhone 7 and the Intel-based iPhone 7 […] decided not to use certain capabilities.” An example is software features which increase the rate of downloads.

All in all, the claim is that Apple withdrew the full performance potential of Qualcomm mobile device processing chips to hide the superiority of Qualcomm chips over Intel chips.

Qualcomm hopes to gain two things: to recover damages from Apple for “reneging on its promises in several agreements,” and to stop interference of Apple in their manufacturing deals.

"I suppose they [Apple] look at our licensing agreements as input costs for them, which obviously have potential for reducing profits. They’re trying to lower input costs. We’re a good target for that,” said Qualcomm general counsel Don Rosenberg.

Stocks that Aren't in the News. Yet.

You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Intel Corporation (INTC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research