Apple has decided not to pay any more royalties to Qualcomm, the semiconductor and Telecom Company whose processors it uses in its phones. It won’t do so until the multiple globe-spanning court battles are over with. Things came to this after Apple filed a billion dollar lawsuit against the company for overcharging for chips and not paying rebates. Apple first sued them in California back in January 2017.
It then added lawsuits against the company in the UK and China. The courts are now left to decide exactly how much Apple really has to pay. This aggression on part of Apple really shows just how much they believe they will win the lawsuit.
An Apple spokesperson told Reuters:
Without an agreed-upon rate to determine how much is owed, we have suspended payments until the correct amount can be determined by the court.
Qualcomm isn’t Happy
Qualcomm, however, isn’t too happy about Apple’s decision. According to the company General Counsel, Don Rosenberg, the license agreement between the two companies is valid and enforceable and is, therefore, being improperly interfered with. Another thing is that Apple pays the manufacturers of the iPhone and iPads, who then pay Qualcomm: Apple doesn’t pay the company directly.
Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade
Rosenberg explained. Therefore Qualcomm has had to reevaluate its earnings for this quarter of 2017. Qualcomm now expects a dip of $500 million in revenue this quarter due to Apple’s decision of refraining from paying the royalties.
This figure went down from between $5.3 billion and $6.1 billion before to $4.8 billion and $5.6 billion now. This could lead to serious problems for both companies: Qualcomm might lose market and Apple may have to find a new manufacturer of chips for its products.