This is war.
Qualcomm, which has been in a heated battle with engineering collaborator Apple over patent royalty pays, may be seeking the nuclear alternative, according to a Bloomberg report, perhaps asking the United States International Trade Commission( USITC) to block iPhone imports.
At the root of the dispute between Apple and Qualcomm are cellular communication technology patents that Apple and others license from Qualcomm for a hefty fee.
Tension between Qualcomm and partners has been brewing for months and finally bubbled over in January when the Federal Trade Commission accused Qualcomm of anti-trust practices. Basically the deals it was stimulating with corporations like Apple were considered unjust. Proportion of the questions was that Qualcomm was accusing Apple a licensing fee for every single iPhone, whether or not every machine applied Qualcomm’s cellular engineerings. As of the iPhone 7, Apple started mixing in Intel baseband processors to the iPhone mix.
An investor asked Apple CEO Tim Cook why he was still withholding pays from Qualcomm, risking Qualcomm withholding future cellular modem sales to Apple or Qualcomm “potentially even get an injunction on iPhones in select geographies around the world.”
Cook reiterated that patent-holding corporations like Qualcomm must give licenses to those patents at fair, reasonable, and non-discriminatory( FRAND) words. Qualcomm, he noted, has not done that. Cook also made it clear that Apple believes it owes Qualcomm something, just not the amount Qualcomm is charging.
Then Cook added, “I don’t belief anyone is going to decide to enjoin the iPhone based on such a. I think that there’s plenty of case law around that subject, but we shall see.”
The “we’ll see” left the door open and, was pointed out that, perhaps, even Cook envisioned Qualcomm might make this move.
Threatening to block one of the world’s most popular products might seem risky or, at the least, like posturing. Perhaps this is a calculated leak intended to move this battle out of the courts and back to the bargaining table.
Some industry watchers, however, believe Qualcomm is dead serious.
“I firmly believe that Qualcomm will seek an iPhone importation block and they are doing it to get paid for the IP Apple is devouring for free, ” told Moor Insights& Strategy President and Principal Analyst Patrick Moorhead. “Apple isnt going to come back to the table and Qualcomm isnt going to change their 3gpp ETSI-agreed licensing process unless national courts requires it.”
There is, however , no official proof that Qualcomm has stimulated such a move.
“No complaint has been filed with the Commission at this time, ” U.S. International Trade Commission Public Affairs Officer Peg OLaughlin told via email.
The lack of paperwork doesn’t mean Qualcomm, which would not comment on this story, isn’t considering the move, but it builds it seem less like a dangerous action and more like something else.
“Yes, it is a negotiating tactic, ” told Analyst and Creative Strategies President Tim Bajarin, adding, “[ Qualcomm] would probably not be able to get an injunction but could use this move to force Apple to be more proactive in dealing with this problem.”
Negotiating in public is nothing new and would make more appreciation than blocking the upcoming iPhone 8. That potentially catastrophic act would not only harm Apple the blast waves might lay out Qualcomm as well.
Imagine how unpopular Qualcomm would be if it became the chief architect of an endless iPhone 8 delay.
Have Qualcomm execs never been on the web? Have they not noticed the endless creek of iPhone 8 rumors and speculation? There were huge interest and pent-up demand for this non-existent device.
If Qualcomm successfully blocks the iPhone 8( with USITC’s help, of course) which is highly unlikely it will be vilified across media( social and editorial ), and probably has become a pariah among tech partners like Samsung, which likewise partners with Qualcomm and exports telephones to the U.S. It’s hard to imagine how any handset producer would view this potential move favorably.
Qualcomm will likewise get paid nothing.
In effect, Qualcomm’s nuclear alternative could mortally wound Qualcomm. And when the dust clears, Apple would pick itself up, brush itself off, and eventually ship the iPhone 8 with Intel’s cellular engineering. Someone else would end up owning Qualcomm’s patents, probably a patent troll, but Apple would still have an easier time dealing with them.