Qualcomm sues four Apple contract manufacturers

Qualcomm sues four Apple contract manufacturers

Specifically, Qualcomm filed a breach of contract complaint against Foxconn, Pegatron Corporation, Wistron Corporation, and Compal Electronics for breaching their license agreements.

Unlike other smartphone companies, Apple doesn't have a direct license with Qualcomm and instead pays contractors to make its devices, parts of which are used to cover royalties such as those owed under agreements struck before the first iPhone appeared.

Qualcomm had said last month Apple had instructed its suppliers not to pay Qualcomm the royalties Qualcomm believes it is entitled to for use of its intellectual property in the iPhone, which caused Qualcomm to slash its financial forecast.

He went on to say that "the manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference".

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San Diego-based Qualcomm announced this morning that it has filed a complaint in the United States District Court for the Southern District of California against FIH Mobile Ltd. and Hon Hai Precision Industry Co., Ltd. "We've been trying to reach a licensing agreement with Qualcomm for more than five years but they have refused to negotiate fair terms", an Apple representative said.

An escalating battle between Apple and Qualcomm over money and patent rights is drawing in Taiwanese contractors that assemble Apple's iPhones. These companies are pushing for patent royalties based on the cost of the cellular modem chip instead of the entire phone, and they want Qualcomm to agree to license not only smartphone makers but also rival chip outfits such as Intel and Samsung. Following that, Apple launched a lawsuit of their own in which they alleged that Qualcomm had withheld payments to them as a form of "punishment" amongst other things.

Qualcomm's shares were marginally lower at $55.66 in premarket trading. "Moreover, Apple has agreed to indemnify defendants for any damages they may incur as a result of breaching their agreements with Qualcomm, further demonstrating Apple's strong-arm tactics".

Rosenberg said manufacturers like Foxconn have been put in the middle - they're paying royalties on non-Apple products as they have for a decade or more. "And we said, that is interesting, but that is between you and Apple". Its technology is inside almost every smartphone. A hearing is scheduled for June 15, and Koh has set a trial date of January 3, 2019.

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