Apple, Qualcomm Split Creates Questions

This year’s iPhone just launched with new features and the highest price tag ever for the X version. In addition to whatever bells and whistles Apple is planning for next year’s iteration, it is working on a design that does not depend on chips from Qualcomm. 

The Wall Street Journal reported that Apple’s iconic phones and iPads are to be Qualcomm-free next year. The move is stimulated by Qualcomm’s having held back “software critical to testing its chips in iPhone and iPad prototypes,” according to the report.

Qualcomm denies any wrongdoing, insisting that the components had “already been fully tested and released to Apple,” as quoted in the Wall Street Journal .  However, Apple seems to have been planning to make its iPhones less dependent on Qualcomm, though it is the dominant chip supplier for such devices. 

iPhone X Photo courtesy: Apple

iPhone X Photo courtesy: Apple

It already began putting in some Intel chips into its phones last year, the Wall Street Journal report.  The iPhone 7 and 7 Plus models, as well as this year’s 8 and 8 plus  contain a mix of chips from both Qualcomm and Intel.  The mix of chips may now shift to components from Intel and Media-Tek.  Following good supply chain practice, Apple may simply prefer a dual-source situation for essential iPhone, which reduces risk and improves the customer’s negotiation position.   

But leaving out Qualcomm altogether would represent the end of a decade-long supplier relationship that had persisted between the two companies. Like the end to a marriage, the breakup between the two giants has manifested itself in signs of mounting hostility that escalate into demands for damages going to court. 

In October,Digital Trends reported that the two “are engaged in what will likely be a year’s long and epic battle.” Most of the complaints come from Apple, which is suing Qualcomm for one billion dollars in the US and over a hundred million in the UK and China.

Qualcomm’s response is an aggressive one, taking action to try to prevent not just the sale of but also the production of iPhones in China, Bloomberg reported. Qualcomm’s representative, Christine Trimble, told Bloomberg that the reason for the suit is that “Apple employs technologies invented by Qualcomm without paying for them.” 

As for the three patents in question, Apple claims that they were never discussed and that there are no grounds for the suit. However, in light of the fact that the bulk of iPhone production takes place in that country, and that the sale of those phones make up nearly 66% of the company’s revenue that is a major attack.

Mike Walkley, an analyst quoted by Bloomberg, considered Qualcomm’s suit to be a ploy to “to get Apple back to the negotiating table.” If that was the intent, though, it backfired spectacularly as Apple’s response is to seriously consider cutting off Qualcomm altogether.

It seems that Apple’s plan is to punish Qualcomm directly through the market. Currently, in the words of Digital Trends“ Qualcomm is king of the mobile processor industry,” which in figures ,supplied by the Wall Street Journal  amounts to half of that market. Media-Tek has a quarter, and Intel only 6%. So those two companies would likely welcome the opportunity to build up their shares at the expense of Qualcomm.

According to the Wall Street Journal’s figures Apple’s iPhone output amounts to over 200 million each year. Giving a piece of that most significant pie to Qualcomm’s rivals means that they will stand to gain significantly from a share of “the roughly $5 billion market for stand-alone modem chips.” And their gain would be Qualcomm’s loss.

1 comment on “Apple, Qualcomm Split Creates Questions

  1. seojepara
    November 27, 2017


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