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Apple Wanted To Use Qualcomm Chips For Its 2018 iPhones, But Qualcomm Refused Because of Companies' Licensing Dispute (cnet.com) 144

Apple's operating chief said on Monday that Qualcomm refused to sell its 4G LTE processors to the company due to the companies' licensing dispute. According to CNET, that decision "had a ripple effect on how quickly Apple can make the shift to 5G." From the report: Qualcomm continues to provide Apple with chips for its older iPhones, including the iPhone 7 and 7 Plus, Apple COO Jeff Williams testified Monday during the US Federal Trade Commission's trial against Qualcomm. But it won't provide Apple with processors for the newest iPhones, designed since the two began fighting over patents, he said. And Williams believes the royalty rate Apple paid for using Qualcomm patents -- $7.50 per iPhone -- is too high.

The FTC has accused Qualcomm of operating a monopoly in wireless chips, forcing customers like Apple to work with it exclusively and charging excessive licensing fees for its technology. The FTC has said that Qualcomm forced Apple to pay licensing fees for its technology in exchange for using its chips in iPhones. The trial kicked off Jan. 4 in US District Court in San Jose, California. Testimony covers negotiations and events that occurred before March 2018 and can't encompass anything after that date.
Apple is expected to only use Intel chips in its next iPhones, something that will make Apple late to the market for 5G phones. "By the 2019 holiday season, every major Android vendor in the U.S. will have a 5G phone available," reports CNET. "But Intel's 5G modem isn't expected to hit phones until 2020."
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Apple Wanted To Use Qualcomm Chips For Its 2018 iPhones, But Qualcomm Refused Because of Companies' Licensing Dispute

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  • by SuperKendall ( 25149 ) on Monday January 14, 2019 @07:06PM (#57962368)

    It seems like the whole 5G rollout thing is becoming a bit of a mess, maybe delivering 5G in 2020 is not so bad as most people are pretty happy with LTE speeds now and the question of you are getting 5G or not will have been resolved by then, along with somewhat expanded networks.

    I will say that Qualcom chips did seem like they were more stable though, so from that aspect Apple has been hurt by this...

    It's proven for sure that Apple is right to want to take all chip design in-house.

    • by zlives ( 2009072 )

      then why go with the intel chip, I am sure we all really needed IME on our cell phones

      • then why go with the intel chip

        It's not like Apple can design the cellular modems over night, so until they can come up with something good the next best thing is to go with a medium term more stable competitor that will actually sell them chips.

        Maybe in five years we'll see an Apple part replacing this...

        • Qualacom has alleged in court filings that Apple provided Qualacom trade secrets and code to Intel to help intel improve their modems. This data had been transferred to Apple for evaluation for future products.

          If it was my company and I believed that had happened I wouldn't sell Apple chips for new stuff either. They would want to evaluate the product and then they'd hand all the IP over to intel.

        • by AmiMoJo ( 196126 )

          The enormity of making your own 5G chipset is underappreciated I think.

          First you need to licence all the necessary patents. Normally it doesn't cost you anything because you just licence your own patents in return, but Apple doesn't have any patents relevant to the owners of 5G tech so they will have to pay licencing fees.

          Then you need to get the talent. Obviously such people are in high demand and their employers won't give them up easily.

          Then you need to do the actual design and figure out how to fabricat

          • The enormity of making your own 5G chipset is underappreciated I think.

            First you need to licence all the necessary patents.

            And that's where your arguments already fails spectacularly - because Qualcomm refuses to give out licenses to competing chip makers.

            • by AmiMoJo ( 196126 )

              It has to, otherwise those patents can't be part of the 5G standard. The deal is that if patents are going to be part of the standard they must be licences under reasonable and non-discriminatory (RAND) terms.

              • It has to, otherwise those patents can't be part of the 5G standard

                Exactly, and that's why the FTC is suing Qualcomm, because they violate that principle (and then some). Haven't you been paying attention?

    • It seems like the whole 5G rollout thing is becoming a bit of a mess

      In what regard? It looks just like any other technology transition so far, and that even includes companies lying about their technology.

      Better question: With phones no longer being yearly disposable devices does it make sense for Apple to continue to always adopt the latest modem last as they have done with all previous changes in technology? It may be far more than 1 year that you will be waiting.

    • Comment removed based on user account deletion
  • by ITRambo ( 1467509 ) on Monday January 14, 2019 @07:17PM (#57962414)
    5G will be limited to cities and areas of concentrated populations. I expect the 5G roll-out, to consumers, won't begin in earnest until the big ISP's determine how costly it actually will be. This won't hurt Apple very much at all. "Wait 'till next year" - Ernie Banks
    • by zlives ( 2009072 )

      yes but the real issue here is that apple will then have to couragify its 5g rollout a bit later than everyone else and they are already projecting looses in hardware market. without the coolest new tech... it would look more bleak.

    • The really high speed 5G will only be in cities and more densely populated areas. The long range 5G based on existing cell towers will be rolled out everywhere. It will offer marginally faster speeds, though from what I've read the main benefit is better channel management, meaning towers will be able to pump out more speed overall.

  • OMG (Score:3, Funny)

    by Anonymous Coward on Monday January 14, 2019 @07:21PM (#57962440)

    Can we ever survive without 5G on iphone 9? Crapdroids will have it! OMG OMG! How can the world survive without 5G on iphones??? no gigabit speed!!! no 8k!!!

  • The FTC has accused Qualcomm of operating a monopoly in wireless chips, forcing customers like Apple to work with it exclusively and charging excessive licensing fees for its technology.

    Isn't that the intention of patents? They grant a limited-time monopoly (in exchange for the design details being made public).

    • How dare you sully a Slashdot thread with facts?

    • by ShanghaiBill ( 739463 ) on Monday January 14, 2019 @07:43PM (#57962518)

      Isn't that the intention of patents? They grant a limited-time monopoly (in exchange for the design details being made public).

      No. Patents give you a limited monopoly. It is not illegal to have a monopoly.

      It is illegal to ABUSE a monopoly through market manipulation, exclusive distribution deals, coercive licensing, and predatory pricing.

      • by jezwel ( 2451108 )

        Patents give you a limited monopoly. It is not illegal to have a monopoly.

        It is illegal to ABUSE a monopoly through market manipulation, exclusive distribution deals, coercive licensing, and predatory pricing.

        Intel is second supplier, and going by the article would normally supply about half the modems for each iPhone model. That means Qualcomm (QC) does not have a monopoly.
        There's more details in the article about how QC (and other manufacturers do this too) price the cost of using their technology based

      • I believe a patent, by its very nature a limited Government-granted monopoly, waives the issue about exclusive distribution. And coercive licensing and predatory pricing is very much "in the eye of the beholder". As it is based on a singular item (the patent - the Government-acknowledged-and-granted monopoly), the company can charge whatever they want with near impunity. It's only when it becomes part of a standard that things get squishy...
      • It is not illegal to have a monopoly.It is illegal to ABUSE a monopoly through market manipulation, exclusive distribution deals, coercive licensing, and predatory pricing.

        No it's not, not in the US anyway. It's illegal to leverage a monopoly to take control of another market or product. Otherwise there is nothing illegal about a monopoly in the US at least. I suggest you evaluate the Sherman Anti-Trust law and the case law behind it. There's nothing illegal about obtaining a trust, or abusing customers afterwards. It's only illegal to use that monopoly to enter another market or service.

      • Isn't that the intention of patents? They grant a limited-time monopoly (in exchange for the design details being made public).

        No. Patents give you a limited monopoly. It is not illegal to have a monopoly.

        It is illegal to ABUSE a monopoly through market manipulation, exclusive distribution deals, coercive licensing, and predatory pricing.

        It's not illegal to do so through a patent, though. The patent owner is under no obligation to be reasonable with their patent. They can outright refuse to license the patent to one company while giving it away for free use to another.

    • Standards-Essential patents don't. Once you get the world to agree to use your technology exclusively, you generally don't get to decide who can have nice things any more, or your product isn't a standard any more. Typically, as part of the give-and-take of turning your patented technology into a standard, you must commit to licensing your technology in a fair, reasonable, and non-discriminatory manner -- you don't get to play kingmaker. That's what you give up to earn scads of business.
      • So... Has any other phone maker complained about the payment to Qualcomm to the point of withholding payment? If not - then what Qualcomm is asking would be considered "fair and reasonable" since 99% of the market agrees. And if they're asking the same thing of everyone - it's non-discriminatory. Why should Apple get preferential treatment?
        • So... Has any other phone maker complained about the payment to Qualcomm to the point of withholding payment?

          No, for that they are are too afraid. But Samsung, Google, & others formally back Apple in legal dispute with Qualcomm [reuters.com]

          • Sure, they'd all love to pay less! I'd love not to have to pay a $4 "license fee" to Apple to build with the Lightning connector (that's in addition to buying the MFi chip and the Lightning connector, and using an Apple-approved manufacturer). But is Apple paying anything different than the others? If not - then it's fair (they signed it up front), reasonable (no more than what Apple and others charge for their IP), and non-discriminatory (it's the same as everyone else).
            • Sure, they'd all love to pay less! I'd love not to have to pay a $4 "license fee" to Apple

              Stop lying. You keep insisting that you'd never buy something from Apple, so don't pretend you would so you cn whine about their prices. You lame little liar boy.

              Thanks for admitting you were wrong by lying though.

              • I don't buy Apple products - you are correct. However, I design plenty of audio products for companies that do Apple-based products. Headphones, amplifiers, microphones, etc. And of course, you've not addressed my statements - Apple sells you a chip AND makes you pay a license fee. AND requires you to use an approved Apple CM. Facts don't penetrate the Reality Distortion Field very well, do they?
                • I don't buy Apple products - you are correct. However, I design plenty of audio products for companies that do Apple-based products. Headphones, amplifiers, microphones, etc.

                  Please warn us which companies you work for.

    • The FTC has accused Qualcomm of operating a monopoly in wireless chips, forcing customers like Apple to work with it exclusively and charging excessive licensing fees for its technology.

      Isn't that the intention of patents? They grant a limited-time monopoly (in exchange for the design details being made public).

      Yeah, but then those pesky standards with their silly FRAND terms come in and ruin the racket. Companies with patents should be able to force other companies to license them even without standards that require them.

  • I mean Apple, which made I don't know a metric ton of profit last year (don't ask me how much because I'm too lazy to look it up), doesn't want to pay the royalties on parts used in a product that made them tons of money. The supplier then cut them off for non payment of said royalties. Now Apple is all but hurt that they have to go to another vendor who won't have the same type of parts for them for at least another year? Does that about sum it up? If so, go cry me a fricking river Apple. Open your ru
  • License Fees? (Score:1, Insightful)

    by tbq ( 874261 )

    The FTC has said that Qualcomm forced Apple to pay licensing fees for its technology in exchange for using its chips in iPhones.

    Am I missing something? Isn't that how licensing works?

  • It's like Harvey Dent -- from one side very good hardware and from the other a blood-sucking patent troll. Some even suggesting to split the company in two.
  • by Richard_at_work ( 517087 ) on Monday January 14, 2019 @07:59PM (#57962608)

    Qualcomm wanted 1.5% of an iPhone Xr ($499).

    Which Apple deems to be too much.

    But Apple will happily take 15% from a app sale without any negotiation...

    • What's even funnier is that what Qualcomm wants Apple to pay, is what Apple wanted Samsung to pay. Samsung's patents were FRAND so Apple could license them for a few cents (basically a percentage of the component cost). But they wanted Samsung to pay them a % of the total phone price (about $10-$15 if I remember) to license Apple's patents.
  • Allow third parties to sell computers and phones based on Apple chips.
    Whatâ(TM)s good for the goose ought to be good for the gander.

  • by Ecuador ( 740021 ) on Monday January 14, 2019 @08:04PM (#57962634) Homepage

    Seriously? On $1000 devices that cost them $300 to make? And I assume this is some sort of actual/essential technology, they are not seeking to license gestures or shapes, correct? And from a company that keeps 30% of developer earnings (a bit more, devs also pay currency conversion, I end up with closer 66% of revenue)?
    Apple never ceases to amaze me with their hypocrisy and audacity.

    • by guruevi ( 827432 )

      The license cost is for a patent pool that is still quite generic and is on top of the actual chip and its cost.

      Apple and Qualcomm have negotiated license exchanges but Apple seems to have nothing that Qualcomm wants except a boat load of money. Apple could pay it but then all its suppliers will start charging a shakedown/licensing fee.

    • They want 1.5% of the sale price for the technology that makes a cellphone a cellphone.
      The same rate everyone else pays.

      I guess Apple didn't think it was fair that just because they jack up the retail price, they should pay more for the primary feature. The thing that differentiates an iPhone from an iPod.

    • Qualacom's patents are essential to all cellular networks. If you want to use a cellular service that's digital you have to license Qualacom's patents. They are the guys that control about 50% of the entire patent pool on digital networks. Asking for $7.50 is FRAND IMO, now if they were asking for $75.50 it might be a different story but hell, it's under $10 for world changing technological advances.

  • Apple jacks up the price of the iPhone, then raises a stink that one of their parts suppliers is jacking up their prices, too? Oh, the irony.

    They're just delivering you more value, or whatever bullshit excuse you used for your price increase, Apple. Capitalism 101, baby.

    • No, their supplier wants to charge them the same they charge all the other OEM's.

      They had a deal which is the subject of an anti-trust suit in EU. The deal is long over so Qualcomm wants its standard rates. Apple wants to keep its old "exclusive qualcomm rates" without the anti-trust exclusive part.

      • No, their supplier wants to charge them the same they charge all the other OEM's.

        But Qualcomm isn't their supplier. They are the patent troll that double dips on their patents - hence the anti trust suit this article is about.

  • With Apple as a paying customer Intel would move that up significantly. Heck they might even hire 3 more engineers.

  • When Intel's modem comes out in 2020, it won't be as good as the 2019 Qualcomm ones either.

    They may make decent CPU's but Intel suck at modems.

  • Let's say the Qualcomm chip cost $30. If the licencing fee is $7.5 per chip that means the chip really cost $37.5. Why does Qualcomm call it a licencing fee? It's simply the price of the chip.

    I think Apple does not have to pay this fee annually or something after they sold the phones to customers.

    • Let's say the Qualcomm chip cost $30. If the licencing fee is $7.5 per chip that means the chip really cost $37.5. Why does Qualcomm call it a licencing fee? It's simply the price of the chip.

      The problem is that Apple buys their chips from Intel, not Qualcomm. Then Qualcomm says they owe them a license fees for the patents chip, and then a percentage from the sales price of the phone on top of that, for the same patents.

  • I wondered at the time if the initial volley of Apple to Samsung was a negotiation tactic to get the components down in price to improve profits. Spend a few million, get Samsung to say "ok, we'll bang down the chips/screen/ram/storage down (x%)" but of course it all went a bit pear shaped. It's strange how much Apple seems to sue their own suppliers. This appears to be another situation where it's all gone non-according to plan.

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