Apple Sues Qualcomm for $1 Billion, Likely Related to Snapdragon X16 Modem

Apple sues Qualcomm - Snapdragon X16 modem chip

Apple, possibly the biggest monopolist in the smartphone market after Google with its Android, is suing Qualcomm for allegedly abusing its dominant position in the mobile wireless chip market.

While it is a well known fact that Qualcomm has been a key supplier to Apple all these years, this may put a spoke in the wheels of iPhone 8. The 2017 flagship iPhone from Apple this year is rumored to use Qualcomm’s Snapdragon X16 LTE modem because Intel won’t be releasing the XMM 7560 in time for the iPhone 8 launch in September.

That means Apple has only one option – Qualcomm’s Snapdragon X16 wireless modem – if it wants iPhone 8 to have the kind of performance that a milestone device deserves. The current XMM 7360 from Intel is already being used on iPhone 7 and iPhone 7 Plus, along with Qualcomm’s X12 chip on certain models, and Apple is certainly not going to stay away from an upgrade for a very important product release.

RELATED: Apple iPhone 8 to Ditch Intel’s XMM 7480 Cellular Modem for Snapdragon X16?

But there’s a big problem because the XMM 7480 isn’t a top-of-the-line product, unfortunately. It is still made to the 28nm manufacturing standard, not even the 14nm that is currently being developed, and most definitely not the 10nm technology that Samsung is using to make Qualcomm’s Snapdragon 835 processors.

That’s why Apple getting the X16 may be more crucial to iPhone 8 than Apple would like.

Is this why they’re pulling Qualcomm into the spotlight…so the chipmaker doesn’t put a premium on the X16 when Apple sends them a purchase order? Or has that already happened, and Apple is now trying to put the squeeze on them using the FCC as its vehicle?

The Federal Trade Commission (FTC) is already investigating Qualcomm on the suspicion that the company is unfairly leveraging its dominant position to charge high royalties “on key, standard essential patents, which are supposed to be made available at reasonable rates under law.”

What’s significant about this is that it is now being assumed that Qualcomm is withholding $1 billion in scheduled payments to Apple because the iPhone maker is cooperating with the FTC in this regard.

This kind of tension can’t be good for either company. Qualcomm won’t want to lose billions of dollars of business over a billion-dollar unpaid bill to Apple, and Apple won’t want to lose the opportunity to get one of the fastest wireless mobile modems on the market for an extremely crucial iPhone launch.

What might happen now is that the two will likely settle this out of court, and then grit their teeth while signing a contract to be partners again this year. So Apple sues Qualcomm, they enter into talks, find a mutually agreeable price for the Snapdragon X16 modem and both companies are happy. For now.

Why might Apple be doing this? Because the company is under tremendous pressure from investors after its dismal devices sales growth during the last fiscal, and the cascade effect of that could be forcing Apple to put the squeeze on all its suppliers to reduce their costs so Apple Inc. can maintain its own high profit margins on iPhone sales.

Qualcomm merely got caught in the cross-fire. That’s likely, because their General Counsel Don Rosenberg is already calling Apple’s allegations “baseless” rather than simply declining to comment.

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