Apple Claims Qualcomm Wouldn’t Sell It 5G Chips, Delaying Transition

As the Apple-Qualcomm legal spat drags on, both companies have leveled various accusations against each other, claiming that the other has abused the market and various business practices towards its own ends.

Now, Apple is claiming that it would have loved to continue working with Qualcomm on modems — just loved to — but that it was forced to start second-sourcing from Intel as a result of Qualcomm’s intransigence on the modem issue. In fact, Apple’s shift to 5G has been delayed because it must rely solely on Intel modems, and Intel doesn’t expect to make the shift to 5G until 2020.

Apple COO Jeff Williams testified in court that his company has been unable to persuade Qualcomm to work with it after Apple filed lawsuits protesting Qualcomm’s licensing practices. “We have been unable to get them to support us on new design wins past that time [when Apple filed a lawsuit against Qualcomm],” Williams said. “This has been a challenge.” Apple is also contesting the amount of money it pays to Qualcomm on a per-iPhone basis, arguing that $7.50 is too high.

The strategy, according to Williams, was to dual-source devices from both Intel and Qualcomm, continuing a plan Apple began following several years previously. “The strategy was to dual-source in 2018 as well,” Williams said Monday. “We were working toward doing that with Qualcomm, but in the end they would not support us or sell us chips… We would have loved to continue to have access to Qualcomm’s tech.”

I don’t doubt that this is true, as far as it goes. Having a deal with multiple suppliers is good for Apple and its ability to play them against each other. But would Apple have double-sourced its devices between Intel and Qualcomm if the former only had an LTE modem and the latter was ready to go with 5G services? That’s a lot less clear.

Historically, Apple has been so concerned about ensuring that its devices were on an even playing field, that it actually hampered the performance of its Qualcomm devices to ensure they had the closest feature set and capability list compared with Intel as possible, even when this meant disabling features and capabilities on the Qualcomm chips.

It seems telling that Williams references 2018, when Qualcomm didn’t have a 5G modem to ship. For 2019, Apple would’ve been stuck with the same unenviable set of choices: It could launch certain high-end flagship devices on a Qualcomm 5G modem (and advertised them as such), kept its entire product family back on LTE and shipped only some devices with a 5G modem that they didn’t actually use, or simply stuck with a dual-sourced LTE arrangement analogous to what it used in previous generations.

Qualcomm executives have publicly stated that they remain willing to work with Apple on a 5G solution, but the three-way lawsuit between the FTC, Qualcomm, and Apple makes it collectively unlikely that such a chummy agreement to the mutual benefit of all parties can be reached. Qualcomm wants Apple to pay a licensing fee based on the value of the final device, while Apple wants to pay based on the value of Qualcomm’s provided IP. Qualcomm claims Apple currently owes it $7B in unpaid licensing fees.

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