With expectations high that Apple will roll out the iPhone 8 at some point this year, the legal battle between the two could hurt Qualcomm’s relationship with Apple and thus its sales prospects. The iPhone 8 is expected to have a lot of innovation crammed in that could breathe new life into the smartphone market, which is still Qualcomm’s main business. With the iPhone 7, Apple for the first time tapped Intel Corp. (INTC) as a second source of mobile chips. When Apple launched its $1 billion lawsuit against Qualcomm late last month, shares of Intel gained as expectations abounded that it could become a bigger supplier to Apple.
Qualcomm CEO Optimistic
Against that backdrop, Qualcomm Chief Executive Steven Mollenkopf didn’t seem so concerned about the fight with Apple. According to CNBC, Mollenkopf said at the Goldman Sachs Technology and Internet Conference that Qualcomm has been through patent disputes in the past with the CEO pointing to its fight with Nokia years ago. Because of its past experience and the fact that it has secured more than 300 licenses, 120 of which came from China during the course of the past two years, it has experience with lawsuits. “It's pretty difficult to look at Qualcomm and say: I don't want to work with them some time in the future," Mollenkopf said, noting that he expects Apple and Qualcomm to settle out of court. He noted that Qualcomm will likely be quiet as the battle develops, preferring not to argue every point in the media. (See also: Report: Qualcomm Mulling Apple Countersuit.)
In late January, Apple, which up until the launch of the iPhone 7 only used Qualcomm’s chips, claimed in the lawsuit that Qualcomm withheld close to $1 billion in payments to Apple “for responding truthfully to law enforcement agencies investigating them." Apple was referring to its cooperation with the Korea Fair Trade Commission, which fined Qualcomm $865 million over what it says are anti-competitive behaviors when licensing its patents.
Apple’s lawsuit also contends Qualcomm tried to “extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm's release of those payments to Apple," something it said it refused to do. What’s more, Apple says Qualcomm overcharged it by five or more times the rate of its other licensors combined charge for cellular patents. “We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the court's," Apple said in the statement. Qualcomm has called the lawsuit “baseless” and vowed to fight it.