Apple 'demanded $1bn' for Qualcomm to get iPhone deal

Apple Considered Samsung Media Tek to Supply 5G Modems for 2019 iPhones

Antitrust regulators have argued the deal with Apple was part of a pattern of anticompetitive conduct by Qualcomm to preserve its dominance in modem chips and exclude players like Intel.

Between 2011 and 2016, Apple relied on San Diego-based Qualcomm as the sole supplier of such chips, which help iPhones connect to wireless networks.

"Blevins testified that Apple has long sought multiple suppliers for modem chips but signed an agreement with Qualcomm to exclusively supply the chips because the chip supplier offered deep rebates on patent license costs in exchange for exclusivity."

Apple's alleged reasoning was that swapping modems was expensive and the incentive would "ease the technical costs". According to Blevins's testimony, Apple has also been in talks with MediaTek and Samsung to supply 5G modems for future iPhones.

More news: The Samsung Galaxy S10 to debut on the 20th of February

Court findings may show that Qualcomm took advantage of its exclusivity for a time - a Qualcomm executive reportedly strong-armed an Apple exec into paying its prices by saying "I'm your only choice, and I know Apple can afford to pay it".

"The entire concept of Project Antique was to find a second supplier".

Needless to say, that is the argument for the courts, but the sheer fact that a huge chunk of Qualcomm's revenue comes from royalty fees instead of chip sales adds water in Apple's argumentation mill that the double-dip licensing fees that Qualcomm demands are excessive. However, its business relationship with Qualcomm changed "in a very profound and negative manner" after the lawsuit was filed in 2017. "Would we get everything we wanted, given that we paid so much in incentive?"

"They made it very unattractive for us to use another chip supplier", Blevins said of the rebates. In this case, Apple was in early discussions to put the chips in the 2019 iPhone lineup.

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