Apple wanted to use Qualcomm’s 4G LTE processors in its new iPhones, but the chip maker did not sell it, Apple’s chief operating officer testified Monday.
Qualcomm continues to provide Apple chips for its older iPhones, including the iPhone 7 and 7 Plus. Jeff Williams testified Monday during the trial of the US Federal Trade Commission. UU Against Qualcomm. But it will not give Apple processors the newest designed iPhones since the two began fighting over patents, he said. And Williams believes that the royalty rate that Apple paid for the use of Qualcomm patents ($ 7.50 per iPhone) is too high.
“We have not been able to get them to support us in new design wins beyond that time [when Apple filed a lawsuit against Qualcomm],” Williams said. “This has been a challenge.”
The FTC has accused Qualcomm of operating a monopoly on wireless chips, forcing customers like Apple to work exclusively with it and charging excessive license fees for its technology. The FTC has said that Qualcomm forced Apple to pay the license fees for its technology in exchange for using its chips in iPhones. The trial began on January 4 in the US District Court. UU In San Jose, California.
Apple manufactures its own application processor, the brain of the iPhone, but relies on third-party chips for network connectivity. From the iPhone 4S in 2011 to the iPhone 6S and 6S Plus in 2015, the only provider of these chips was Qualcomm. The following year, Apple began using Intel modems on some models of the iPhone 7 and 7 Plus, but still used Qualcomm in versions for Verizon and Sprint.
This trend continued in 2017, but the latest Apple phones, the iPhone XS, XS Max and XR, now only use Intel 4G chips. And it is believed that the next iPhone will also use only Intel chips, something that will make Apple late to the 5G phones market. For the holiday season of 2019, all major Android providers in the United States will have a 5G phone available. But Intel’s 5G modem is not expected to reach phones until 2020.
“The strategy was also to the dual source in 2018,” Williams said Monday. “We were working to do that with Qualcomm, but in the end they would not support us or sell us chips.”
He said he contacted Qualcomm CEO Steve Mollenkopf to sell chips to Apple. When Qualcomm refused, Apple had to call Intel’s CEO at the time, Brian Krzanich, to ask him to provide all the modems needed for the iPhone instead of only half the volume.
“He had to fight,” Williams said. “We would have loved to continue having access to Qualcomm’s technology.”
The FTC, with the help of Intel, rival of the modern chip and the iPhone manufacturer Apple, filed a lawsuit two years ago arguing that Qualcomm has a monopoly on modern chips and hurt the competition by trying to maintain its power. The essay has revealed the inner workings of the most important technology businesses, smartphones, which show how suppliers struggle for dominance and profits.
Qualcomm’s “no license, no chips” policy is at the heart of the FTC’s case against Qualcomm, which lawyers are discussing with judge Lucy Koh this month. Qualcomm customers, such as Apple, do not agree with the policy, and the FTC argues that it harms competition and raises phone prices.
While Qualcomm is fighting the FTC in court, it also faces Apple, which was one of its biggest customers. Apple filed a lawsuit against Qualcomm three days after the FTC complaint, saying that the wireless chip maker did not give the license terms just for its processor technology.
The iPhone maker believes it should pay a fee based solely on the value of Qualcomm’s connectivity chips, not the entire device. He says that Qualcomm is “effectively taxing Apple’s innovation” and that Apple “should not have to pay them for technological advances with which they have nothing to do”. Qualcomm, meanwhile, says that the iPhone would not exist without its technology.
Qualcomm in October said Apple owes $ 7 billion in patent licensing fees.
On Friday at the trial, Tony Blevins, Apple’s vice president of acquisitions and witness of the FTC, said Apple wanted to incorporate an Intel communication chip into its iPad Mini 2, launched in the fall of 2013, but Qualcomm’s business methods crushed the plan . Apple did not like to rely solely on Qualcomm for the modem chips, he said. But in exchange for the exclusive use of its chips, Qualcomm offered reimbursements to Apple that reduced costs, so they were no longer “exorbitant”, an agreement that took Intel out of the iPad Mini 2.