Qualcomm accused Apple of a 'global attack' over royalty payments (AAPL, QCOM)

tim cook

The battle between Apple and its chip supplier Qualcomm just turned seriously sour.

Qualcomm’s most senior lawyer, Don Rosenberg, accused Apple of launching a “global attack” on the company, because it’s interfering with royalty payments from other companies, according to The Financial Times.

Qualcomm issued a profit warning today because of the ongoing tussle with Apple.

Rosenberg said: “Apple’s continued interference with Qualcomm’s agreements to which Apple is not a party is wrongful and the latest step in Apple’s global attack on Qualcomm.”

His comments relate to the fact that Apple is suing Qualcomm in a dispute over how much it pays the chipmaker in royalties.

Apple buys wireless modem chips from Qualcomm and pays license royalties on its wireless patents. But in the lawsuit filed in January, it claimed it’s been overcharged by Qualcomm in the process. It claimed Qualcomm owns Apple $1 billion (£773 million) in rebates.

Now Apple is withholding that $1 billion in payments to third-party suppliers like Foxconn, which those suppliers would then normally pay to Qualcomm. That means Apple’s suppliers are underpaying Qualcomm in royalties until Apple makes back the $1 billion it’s allegedly owed. That could dent the chip supplier’s bottom line, according to The Financial Times report.

In its investor warning, Qualcomm described this as an “example of Apple wielding its enormous commercial leverage over its suppliers.”

Solving the dispute could take years, and Qualcomm docked its quarterly revenue forecast to between $4.8 billion and $5.6 billion (£3.7 billion to £4.3 billion). That’s down from an expected $5.3 billion to $6.1 billion. The company assumed that none of Apple’s other suppliers would be paying up in its guidance.

In its original January filing, Apple said: “For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations.”

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