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Apple Takes Heat from Qualcomm Fight, Chinese Competition

Stung by Apple’s recent decision to withhold royalty payments for its technologies in iPhones, chipmaker Qualcomm is reportedly planning to ask the Washington, D.C.-based International Trade Commission (ITC) to prevent importation of the devices into the U.S.

Apple relies on Asia-based manufacturers to produce its flagship smartphones, and is already reported to be experiencing supply challenges ahead of its next big iPhone launch, expected in the fall. Citing “a person familiar with the company’s strategy,” Bloomberg reported Wednesday that Qualcomm is preparing to ask the ITC to block new iPhones from entering the U.S.

Meanwhile, Qualcomm is facing multiple lawsuits recently filed against it by Apple in the U.S. and China, as well as allegations of unfair practices filed in January by the Federal Trade Commission.


‘Need the Courts To Decide’

The complaints stem from the royalties Qualcomm charges for Apple’s use of its broadband processors, which enable mobile phones to connect with cellular networks. Qualcomm’s modem chip design was used to set the industry standard for mobile communications, and the company agreed to license its technology to phonemakers on “FRAND” (“fair, reasonable and non-discriminatory”) terms.

In a lawsuit filed in January, Apple accused Qualcomm of unfairly charging royalties for “technologies they have nothing to do with,” adding that the company had withheld nearly $1 blllion in fees owed to Apple as “retaliation” for providing information about Qualcomm to regulators in South Korea.

Last Friday, Qualcomm announced that Apple had begun withholding payments to manufacturers “for the royalties those contract manufacturers owe under their licenses with Qualcomm for sales during the quarter ended March 31, 2017.” Qualcomm added that action would lower its expected third-quarter revenues by around $500 million.

On Tuesday, during Apple’s second-quarter earnings call, CEO Tim Cook said that he didn’t believe case law would support an attempt…

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