Qualcomm Inc. (QCOM) continues its battle against smartphone maker Apple Inc. (AAPL), indicating that it has evidence that the tech giant took advantage of its “unprecedented access” to its code, infringing upon a software license in efforts to help out rival Intel Corp. (INTC). (See also: Qualcomm's Apple Dispute Raises Stakes of NXP Deal.)
The chipmaker filed a lawsuit against Cupertino, Calif.-based Apple on Nov. 1 in California state court in San Diego regarding the breach of a contract that governs the use of software needed to make chips work with other parts of mobile phones and communicate with networks. The suit charges that Apple failed to separate its engineers working with Qualcomm and Intel chips as it had promised. The chipmaker noted a particular instance regarding a request from Apple for proprietary Qualcomm information wherein an Intel engineer was on the distribution list.
Profits Hit by Halt in Apple Royalties
The recent lawsuit follows a string of disputes over technology licensing fees that Qualcomm charges for patents covering the basics of how mobile payment systems work. While Apple contends that the chipmaker is unfairly maintaining its leadership position in the market by overcharging, Qualcomm says the iPhone maker is lying to regulators in attempts to score a cheaper price. Apple is seeking $1 billion and has halted royalty payments.
In recent months, Qualcomm has attempted to seek injunctions within the U.S. and China against the sales of iPhones that use the company’s wireless tech. Qualcomm, which has also sued Apple over patent infringement, has been hard hit by the reduction in royalty revenues from Apple and its suppliers. In the recent quarter, despite beating expectations, Qualcomm posted a 90% decline in profits year-over-year (YOY).
On Friday, QCOM skyrocketed nearly 13% on news that Broadcom Ltd. (AVGO) is planning a bid for the company. A deal would create a $200 billion semiconductor giant and mark the largest tech acquisition ever. (See also: Avoid Qualcomm Stock on ‘Elevated Risk’: RBC.)