Apple-Qualcomm Legal Fight Deepens, Suppliers Join The Fray
Zacks Investment Research | Jul 19, 2017 10:22PM ET
In the latest development, Apple Inc.’s (NASDAQ:AAPL) suppliers, namely, Compal, Hon Hai Precision, Pegatron and Wistron have reportedly joined the Cupertino-based tech giant in its fight against chipmaker QUALCOMM Incorporated (NASDAQ:QCOM) .
Per media reports, Apple’s suppliers have filed a lawsuit in the U.S. District Court for the Southern District of California, accusing Qualcomm of “violating” two sections of the Sherman Act, part of the U.S Antitrust Law. They have claimed that Qualcomm continues to extract additional licensing money over assembling of iPhones.
The lawsuit is a retort to Qualcomm’s lawsuit filed in May this year, in which, the company had accused the four suppliers of holding its royalties/license fees on Apple’s insistence. Back then, Qualcomm’s president had said “despite Apple's claims against Qualcomm, Apple suppliers remain contractually obligated to pay royalties to Qualcomm under their license agreements with us, including for sales of iPhones to Apple.”
The Story So Far
The Apple-Qualcomm dispute started in January this year when Qualcomm was dragged to court by Apple in a $1 billion lawsuit related to licensing royalty payments. In the suit filed, Apple had accused Qualcomm of overcharging for chips and refusing to pay some $1 billion in rebates.
Later on, Apple also asked its manufacturing partners – Foxconn, Pegatron, Wistron and Compal Electronics – to stop paying Qualcomm and agreed to indemnify them if Qualcomm took them to court.
In Apr 2017, Qualcomm launched a counterattack on Apple by mentioning the value of its invented technologies, and their contribution and share in the industry through its licensing program. The filing also elaborated on Apple’s illegal and improper handling of agreements and negotiations with device manufacturers, misleading regulators to attack Qualcomm around the world and not utilizing the full performance of Qualcomm's modem chips in its iPhone 7.
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