Four things to know about the Apple-Qualcomm war that is silently changing your iPhone

  • TECH
  • Sunday, 08 Oct 2017

An iPhone 8 is displayed at the Apple Orchard Shop in Singapore September 22, 2017. REUTERS/Edgar Su

It's not commonplace that a clash between tech giants go unnoticed, but the feud between Apple and wireless technology mogul Qualcomm has flown under the radar for quite some time. 

On Oct 4, Bloomberg pulled the veil shrouding the war between the Cupertino tech giant and the San Diego semiconductor giant, chronicling how and where the feud began down to its last juicy details. 

The vast majority of people don't give a flying hoot about wireless modems in their smartphones, but this lawsuit may affect the technology for every iPhone here on out. 

Since the dawn of wireless technology, Qualcomm has held a near-monopoly through its immense R&D section pumping out patents. Since the first iPhone, Apple has relied on Qualcomm to produce modems that allow iPhones to receive wireless data. Qualcomm received a royalty for every iPhone sold, sometimes as high as US$30 (RM127) for each unit. 

That symbiosis changed in 2015, when Apple began working with Intel to develop a modem that was used in some versions of the iPhone 7. "What prompted us to bring the case now as opposed to five years ago is simple," Apple General Counsel Bruce Sewell told Bloomberg. "It's the availability of a second source." 

This year, the feud turned into all-out war. In January, Apple sued Qualcomm, accusing it of basically running an extortion scheme, and cut off payments three months later. In July, Qualcomm sued back, claiming copyright infringement and seeking a ban on importing iPhones built with Intel chips into the United States. The case will go on trial in San Diego next year. 

That's the gist of the feud. But it goes so much beyond that. 

1) Apple CEO Tim Cook allegedly coaxed Samsung to "get aggressive" against Qualcomm. 

Samsung and Apple themselves have the longest-running lawsuit in Silicon Valley history over copyright infringement, but in this feud, they were allies against Qualcomm. 

In 2015, Cook and a Samsung executive – most likely Jay Y. Lee, who is currently in South Korean jail for bribery charges – met in Idaho, with the former pressuring the latter to pressure South Korean antitrust regulators to target Qualcomm, according to Qualcomm's legal filings. 

"Get aggressive," Cook allegedly said to the Samsung executive. 

In December 2016, South Korean antitrust regulators did get aggressive, fining Qualcomm US$853mil (RM3.61bil) for monopolistic actions. The next month, the US Federal Trade Commission accused Qualcomm of anticompetitive tactics. Three days later, Apple sued Qualcomm. 

2) iPhone X uses the Intel modem – which may make it slower than its competitors. 

Although the Apple-Intel modem gave Apple the chutzpah to abandon Qualcomm, it is apparently not as good as Qualcomm's gold standard modems. 

For the iPhone X, Apple opted not to add Gigabit LTE capabilities to its new device, forgoing the opportunity to download data 100 times faster than its predecessor. Samsung Galaxy S8 and the Essential Phone both will have Gigabit LTE capabilities, meaning iPhone X will be behind its main competitors in the data speed race when it launches Nov 3. 

3) You know how Apple Watch Series 3 has an LTE connection? Thank Qualcomm for that.

As one of the bigger splashes in Apple's September product launch event, Apple Watch finally can be untethered from the iPhone in data usage. 

The breakthrough, however, was not an in-house invention. Rather than relying on Intel's parts, as Apple has for iPhone X, the new Apple Watch uses Qualcomm parts to power the connection. 

4) Qualcomm and Apple are both trying to starve each other out. 

Qualcomm wants to settle and believes Apple will kowtow soon. Apple won't bow down soon. 

Qualcomm's patent infringement suit has prompted the US International Trade Commission to investigate. It will likely be decided by September 2018, just in time for Apple's next iPhone launch. Qualcomm is trying to hit Apple where it hurts most by disrupting its iPhone supply chain. 

"It's not going to be like that forever," said Qualcomm CEO Steve Mollenkopf. 

Qualcomm also believes its innovations in 5G technology is going to make the iPhone X look primitive in data connectivity, which can be the ace in the hole which can win the legal war. Apple think that's nonsensical. 

"There's no way that this case settles, absent a complete reinvention of the licensing model that Qualcomm has adapted in the industry," said Sewell. 

The Samsung-Apple double whammy hurt Qualcomm immensely. Along with the South Korean regulators' fine and Apple's refusal to pay payments, Qualcomm reportedly lost a quarter of its market capitalisation. 

In July, Huawei – the world's second-largest smartphone seller – may have stopped paying Qualcomm its royalties, following Apple's footsteps. Qualcomm's stock plunged soon after. 

Qualcomm says it has US$38bil (RM161.02bil) in its war chest to fight Apple. It's a huge load, but there is a problem: Apple has more than US$258bil (RM1.09tril) on hand. — San Jose Mercury News/Tribune News Service

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