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.