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Apple says Qualcomm refused to sell it chips for the latest iPhones

Apple says Qualcomm refused to sell it chips for the latest iPhones


Business gone bad

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Photo by James Bareham / The Verge

Apple says it wanted to use Qualcomm modems in the iPhone XS, XS Max, and XR — but that Qualcomm refused to sell them after Apple sued over its licensing practices. “In the end they would not support us or sell us chips,” Apple’s chief operating officer Jeff Williams revealed today during his testimony to the US Federal Trade Commission, as spotted by CNET. Apple had to use Intel’s LTE chips instead.

Qualcomm is currently on trial, accused of engaging in monopolistic practices including charging unusually high royalty rates, refusing to license patents to other chipmakers, and promising deals to customers like Apple if they exclusively used Qualcomm chips.

While it originally appeared that Apple had shifted to exclusively using Intel modems out of some combination of spite and competitive reasons, Apple said in the courtroom that wasn’t the case. According to Williams, Apple originally planned to split its latest modem order between Qualcomm and Intel. It only turned to Intel to supply all the modems after Qualcomm refused to sell.

“We didn’t have a lot of options.”

The dependency on Intel could also hurt Apple’s chances of bringing a 5G iPhone quickly to market, as Intel’s 5G chips aren’t expected until 2020. Intel’s LTE modems are known to be slower than Qualcomm’s, too. Back when Apple was sourcing both Qualcomm and Intel modems for its phones at the same time, the company had to cap the speeds on Qualcomm modems so that one iPhone wouldn’t have faster speeds than another.

Apple also revealed the price it’s been paying for Qualcomm modems: $7.50 per device, says Williams. That’s apparently five times more than what Apple wanted to pay — just $1.50 per device. Still, Williams said, “We needed their chip supply. If we tried to pursue them legally, we wouldn’t have access to the chips. We didn’t have a lot of options.”

The conflict started in 2017 when Apple sued Qualcomm for unfair licensing terms. Qualcomm then countersued, saying that Apple was infringing on its patents and sharing information with Intel. As of October 2018, Qualcomm said that Apple owes it $7 billion in royalty payments. Since then, Qualcomm has taken the fight to international courts in Germany and China, successfully winning bans on older iPhones being sold in either country. Apple had to pull iPhone 7 and iPhone 8 models in Germany and issue a software update to iPhones in China to circumvent a ban on most iPhones except the latest ones.