Apple designing iPhones, iPads without Qualcomm modems after key testing software withheld...

AppleInsider · October 31, 2017 12:53AM

Amidst an international legal fight against Qualcomm, Apple is said to be mulling a decision to drop the chipmaker's modems in next year's iPhone and iPad models after it was denied access to software used to test key communications components.

Citing sources familiar with the matter, The Wall Street Journal reports Apple is considering building its flagship mobile devices without Qualcomm chipsets, instead opting for cellular modems manufactured by Intel and MediaTek.

Details are murky, but Qualcomm could be to blame for the major iOS device supplier shift. According to the source, Qualcomm stopped sharing hardware testing software with Apple after a lawsuit in January claims the chipmaker uses its "monopoly power" to to squeeze high patent royalties to flout FRAND (fair, reasonable and nondiscriminatory) patent commitments.

Qualcomm said its "modem that could be used in the next generation iPhone has already been fully tested and released to Apple," adding that it is "committed to supporting Apple's new devices," the report said.

However, something is amiss, as Apple at this stage of the production process has never before prepared for a contingency in which iPhones and iPads do not incorporate Qualcomm chips, sources said.

The WSJ notes Apple has until three months before a device is released to decide on a modem manufacturer, a date that is coming up soon if the company's current product cycle holds. Apple traditionally launches next-generation products on an annual basis, meaning a new iPad Pro should see launch mid-year, to be followed by a new iPhone in September.

Apple in its suit characterizes Qualcomm's business practices as price-gouging and extortion. At the heart of the matter are secret manufacturer licensing agreements that demand high royalty rates on Qualcomm-owned IP. Apple has been forced to pay fees for patents obscured by a legal shroud since 2007, when the first iPhone was released.

For example, when Infeneon (now Intel) baseband chips were selected to power iPhone communications, Qualcomm required a licensing fee. The situation worsened when in 2011 Apple introduced an iPhone capable of connecting to CDMA networks, a technology dominated by Qualcomm chipsets.

Apple later lodged two lawsuits in China over similar complaints.

For its part, Qualcomm denies Apple's claims and has filed countersuits claiming breach of contract. Qualcomm also filed complaints with the U.S. International Trade Commission and lawsuits in Germany and China seeking a halt to import and sale of iOS devices on the basis of patent infringement.

Qualcomm CEO Steve Mollenkopf on multiple occasions has said the feud comes down to IP pricing, suggesting Apple is simply looking for a better deal. Mollenkopf believes the legal battle will be settled out of court.

cujoyyc · October 31, 2017 1:01AM

"Qualcomm CEO Steve Mollenkopf on multiple occasions has said the feud …"

A cliffhanger to end the article … unless you're reading the forum version where the cliffhanger is revealed with these lines.

"… comes down to IP pricing.

The WSJ notes Apple has until three months before a device is released to decide on a modem manufacturer. The publication's sources claim the company has not prepared for a contingency in which iPhones and iPads do not incorporate Qualcomm chips at a similar stage in the production process."

edited October 2017

doozydozen · October 31, 2017 1:10AM

Good! F-them. Excited to watch Qualcomm slowly wither and die

apple jockey · October 31, 2017 1:24AM

Play nice Qualcomm, everybody wins! Greed doesn’t necessarily work when the firm you are pressuring can easily pick up its chips and gold, moving on to a supplier who will fairly work with Apple to the benefit of each.

gg1 · October 31, 2017 1:25AM

Is this Cook's thermonuclear moment?

lkrupp · October 31, 2017 1:30AM

Qualcomm assumes it has the best technology available to manufacturers like Apple. Qualcomm thinks they have Apple behind the eight ball. No supplier should ever make that assumption. Like legendary baseball player Satchel Paige said, "Don't look back. Something might be gaining on you.”

soli · October 31, 2017 2:01AM

I don't see how this ends well for Qualcomm.

soli · October 31, 2017 2:02AM

GG1 said:

Is this Cook's thermonuclear moment?

"Qualcomm's patent fee system is a bag of hurt."

k2kw · October 31, 2017 2:31AM

Soli said:

I don't see how this ends well for Qualcomm.

It might end with Apple only making GSM phones I.e. ATT and T-Mobile in USA next year

cali · October 31, 2017 2:32AM

Would love to see some innovative alternative from Apple along with Apple's mobile service cutting all the headaches carriers provide.

GG1 said:

Is this Cook's thermonuclear moment?

I hope not. I wanna see him take down the knockoffs. Hopefully this is practice and not a "war".

wood1208 · October 31, 2017 2:33AM

Long as Apple has alternative, Qualcomm is tossed. Once, Apple completely drops Qualcomm, other phone manufacturers will use such opportunity to threaten Qualcomm to leave which in turn squeeze Qualcomm demanding better IP pricing. So, Qualcomm will Apple business and will receive lower IP pricing from the left over customers. Qualcomm is in loose-loose situation.

edited October 2017

kesem · October 31, 2017 2:36AM

As a Verizon customer I have been very happy with the Qualcomm chips. They are far superior to Intel. Every test shows that. I expect Apple to use the best parts possible and I will be very upset if they don't continue to use Qualcomm chips in the future because of a stupid dispute over how much they pay for the chips. For the first time ever i would consider switching to an Android phone. I pay extra for Verizon because of the quality of the coverage. If the iPhone has worse coverage than an Android phone I WILL LEAVE APPLE.

soli · October 31, 2017 2:39AM

k2kw said:

Soli said:

I don't see how this ends well for Qualcomm.

It might end with Apple only making GSM phones I.e. ATT and T-Mobile in USA next year

I don't think that will happen since even this year's Apple Watch contains only GSM-based cellular tech (UMTS and LTE), and works with Verizon and Sprint. I'm not saying that we're ready for that next year with the iPhone but if push came to shove I think Qualcomm's footing for CDMA-based radios is a weak bargaining chip.

edited October 2017

k2kw · October 31, 2017 2:40AM

wood1208 said:

Long as Apple has alternative, Qualcomm is tossed. Once, Apple completely drops Qualcomm, other phone manufacturers will use such opportunity to threaten Qualcomm to leave which in turn squeeze Qualcomm demanding better IP pricing. So, Qualcomm will Apple business and will receive lower IP pricing from the left over customers. Qualcomm is in loose-loose situation.

Apple may be crawling over glass so that Samsung and Google can make cheap phones. And when the Chinese start don’t be surprised when companies start stealing iOS code .

soundjudgment · October 31, 2017 3:02AM

oh yeah! Now the next iPhones will have 600MHz.. Band 71 added into their line-up.

all-purpose guru · October 31, 2017 4:01AM

As someone who has actually worked with Qualcomm in the past, I can tell you that Qualcomm is a thoroughly evil company to work with. You even HINT that you're looking at alternatives and they threaten to sue you into oblivion.

The idea that they are pulling test resources is not even unexpected-- they play MUCH harder ball than this usually, such as cutting off access to support engineers and documentation. This has been their method of operation since the mid-90s.

At the time, they were the only game in town for CDMA-- luckily there ARE alternatives now and if Apple DOES seek to get rid of Qualcomm there will be lawsuits. That's just how Qualcomm operates.

Another part of the problem is that the licensing agreement that Qualcomm requires is VERY predatory-- they don't just want a fee to use their chips, their fee is based on the cost of the ENTIRE PRODUCT. That's one of the reasons why you haven't seen a cellular modem in the Macbooks-- Qualcomm would get a large fee based on the cost of a $2000-$3000 product, which makes even putting the chips in the device cost prohibitive. This is totally unreasonable and unprecedented in the industry.

This isn't just about money-- Qualcomm is a very difficult company to work with in all areas.

sergioz · October 31, 2017 4:02AM

Qualcomm is definitely acting like big bully on the block. Making cellular modems is not that hard. I believe it comes down to patents that chipmaker holds.
Qualcomm sells snapdragon with modem on SOC
It makes perfect sense for Apple to start building their modem right in to their proprietary A12 chip and not separate!

adonissmu · October 31, 2017 4:17AM

All-Purpose Guru said:

As someone who has actually worked with Qualcomm in the past, I can tell you that Qualcomm is a thoroughly evil company to work with. You even HINT that you're looking at alternatives and they threaten to sue you into oblivion.

The idea that they are pulling test resources is not even unexpected-- they play MUCH harder ball than this usually, such as cutting off access to support engineers and documentation. This has been their method of operation since the mid-90s.

At the time, they were the only game in town for CDMA-- luckily there ARE alternatives now and if Apple DOES seek to get rid of Qualcomm there will be lawsuits. That's just how Qualcomm operates.

Another part of the problem is that the licensing agreement that Qualcomm requires is VERY predatory-- they don't just want a fee to use their chips, their fee is based on the cost of the ENTIRE PRODUCT. That's one of the reasons why you haven't seen a cellular modem in the Macbooks-- Qualcomm would get a large fee based on the cost of a $2000-$3000 product, which makes even putting the chips in the device cost prohibitive. This is totally unreasonable and unprecedented in the industry.

This isn't just about money-- Qualcomm is a very difficult company to work with in all areas.

This is good stuff to know. Can you also post this over at a certain other Apple site. It's useful information to know about.

gg1 · October 31, 2017 4:19AM

k2kw said:

Soli said:

I don't see how this ends well for Qualcomm.

It might end with Apple only making GSM phones I.e. ATT and T-Mobile in USA next year

The problem is that Qualcomm make the best chips for CDMA2000, they own the IP, and CDMA2000 is still in widespread use in the USA (Verizon and Sprint) and a few other countries. But CDMA2000's days are numbered with LTE set to eventually overtake it. When? I don't know. Maybe as long as 10 years in the US.

When that day happens, Intel and others can effectively ignore CDMA2000 support in baseband chips (and the majority of Qualcomm IP issues). Or maybe it takes someone like Apple to move that date up with Apple-designed UMTS/LTE-only baseband chips in future iPhones. Add in Samsung's Exynos baseband chips (which I don't believe support CDMA2000), and together their smartphone volume may push the carriers to LTE faster.

As Soli pointed out, the Apple Watch only works on UMTS/LTE (both GSM-based), but Verizon and Sprint already have (some) LTE support, so the AW works there. Maybe Apple are already pushing for LTE-only adoption starting with the AW?

mplsp · October 31, 2017 4:57AM

Soli said:

I don't see how this ends well for Qualcomm.

Well, say Apple designs it's own modems and they turn out to have a design flaw that leads to disconnects or increased power usage - suddenly Qualcomm looks pretty good.

Qualcom his a slimy company and they deserve to get dumped, but they do make good chips, so Apple (or any other company) needs to make sure they have a solid replacement in line first.

foggyhill · October 31, 2017 5:12AM

kesem said:

As a Verizon customer I have been very happy with the Qualcomm chips. They are far superior to Intel. Every test shows that. I expect Apple to use the best parts possible and I will be very upset if they don't continue to use Qualcomm chips in the future because of a stupid dispute over how much they pay for the chips. For the first time ever i would consider switching to an Android phone. I pay extra for Verizon because of the quality of the coverage. If the iPhone has worse coverage than an Android phone I WILL LEAVE APPLE.

Who gives a crap if you switch. Do it and have a ball.
I will posit that ... You don't own a Iphone and never had. You are POSTURING and THROLLING.

Nobody switches platform for the minute difference those modems in real world operational conditions (and not the laboratories), nobody but Throllers.

Qualcom basically extorted Apple and everyone else in the industry for years and is being destroyed in court continously for that reason.
They'll be lucky to be alive in 10 years the way they're going.

Apple designing iPhones, iPads without Qualcomm modems after key testing software withheld...

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