Apple Halts License Payments to Qualcomm in ‘All-Out War’

Ian King, reporting for Bloomberg:

Apple Inc. cut off billions of dollars in payments to Qualcomm Inc., turning a contract dispute into what one analyst called an “all-out war” that forced the chip supplier to slash forecasts given only days ago.

The world’s largest publicly-traded technology company and one of the main suppliers of components to the iPhone, its most important product, have traded accusations of lying, making threats and trying to create an illegal monopoly. The fight involves billions of dollars of technology licensing revenue that, if permanently cut off or reduced, would damage Qualcomm’s main source of profit and help bolster Apple’s margins.

Apple told Qualcomm it will stop paying licensing revenue to contract manufacturers of the iPhone, the mechanism by which it’s paid the chipmaker since the best-selling smartphone debuted in 2007, the San Diego, California-based company said in a statement. Qualcomm removed any assumption it will get those fees from its forecast for the current period. Apple doesn’t have a direct license with Qualcomm, unlike other phone makers.

Reminds me of that episode of Mad Men where Don Draper said to Duck Phillips, “I don’t have a contract.” This is some serious hardball — Qualcomm had to cut its revenue forecast for the next quarter by $500 million.

★ Saturday, 29 April 2017