Apple CEO: Qualcomm refused to provide modems for iPhone XS and XR
Apple’s chief operations officer, Jeff Williams, said in a lawsuit filed by the FTC against Qualcomm that his company wanted to use Qualcomm’s 4G modem chips for the latest iPhones, but Qualcomm refused.
Williams has stated that as of early 2017, Apple has stopped receiving support from Qualcomm for new iPhone designs, Cnet reports. The Apple CEO said he directly approached Qualcomm CEO Steve Mollenkopf with a request to sell the modem chips to Apple, but Mollenkopf allegedly declined. Williams said his company “would have been happy to continue using Qualcomm’s technology,” but the refusal left Apple without a choice and had to turn to Intel for the modem chips. According to Williams, Apple still uses Qualcomm chips with older iPhones.
The Apple CEO was also asked about why his company decided to continue its relationship with Qualcomm between 2011 and 2013, while Apple was unhappy with Qualcomm’s business stance. Williams stated that Apple had no choice but to sign another license agreement, otherwise it would have to pay more than $7.50 per device in the form of royalties.
In 2013, Apple was able to block a rate increase that Qualcomm wanted, but that meant that Apple remained tied to Qualcomm and had to deal with all kinds of exclusivity clauses. “Otherwise we had to deal with a contractually agreed manufacturer rate of 17 or 18 dollars per device,” Williams said. That would have meant an annual cost increase of $1 billion, he said, describing the situation as if Apple had a “gun to its head.” “We needed their chips and if we were to challenge them legally at this point, we would have lost access to their chips. We had few options,” Williams said.
Apple and Qualcomm have been engaged in a legal battle for about two years now. Apple sued Qualcomm in early 2017 over a royalty dispute. The iPhone maker wants a number of patents invalidated and demands that Qualcomm pay back a billion dollars. The amounts for license payments should also be reduced, according to Apple.
The conflict is now deepening. In December, it emerged that Qualcomm is in the process of enforcing a sales freeze of the iPhone XS and XR in China. According to the American chip designer, this is necessary because Apple would infringe Qualcomm patents. At the end of December, it became clear that Apple is withdrawing its iPhone 7 and 8 from German stores after it lost a patent case from Qualcomm. These are chips for wireless communications from Apple’s supplier Qorvo, which infringe Qualcomm’s patents on envelope tracking technology.
Williams’ statements were made during a hearing of a lawsuit filed against Qualcomm by the US Federal Trade Commission two years ago. According to the regulator, Qualcomm effectively forced Apple to purchase exclusive wireless chips from Qualcomm between 2011 and 2016, because only then could there be a lower royalty rate to be paid. Apple has been using Intel modems since the arrival of the iPhone 7, but also used copies of Qualcomm for those devices.