Published: Mon, January 14, 2019
IT | By Lester Massey

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

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

Samsung's 5G modem will debut in its flagship smartphones this year.

Under the 2011 deal, Qualcomm was named Apple's sole supplier of modem chips, which help mobile phones connect to wireless data networks, in exchange for which Qualcomm agreed to give Apple a rebate - the exact nature of which has not been disclosed. Starting in 2016, Apple split the business between Intel and Qualcomm, but in 2018, Apple moved exclusively to Intel for its newest phones. In any case, both Qualcomm's requirement that a customer license its patents before buying the actual product, and Apple's billion-dollar incentive request sound a bit excessive, so we'll see what the court will decide in the end.

In a testimony last Friday, we have heard new details about the Qualcomm - Apple relationship, the $1 billion incentive Apple received, and what Qualcomm demanded in return. The company's supply chain executive Tony Blevins told the court that generally Apple would use at least two suppliers, but it abandoned plans to put an Intel modem chip in the iPad Mini 2 as it would result in the loss of the Qualcomm rebate everywhere, resulting in higher costs overall.

Since the negotiating team from Cupertino didn't specify a guaranteed number of modems Apple will be ordering from Qualcomm, the chip maker was forced to pursue the infamous exclusivity agreement for iPhone modems that it now sues Apple for breaking. It will be a long wait before we find out which supplier Apple would go for, as the technology giant would reportedly stick with 4G modems this year and its 5G-ready iPhones are expected to launch on 2020. Ot did not want to rely too much on a single supplier.

Blevins said that talking with Samsung, whose Galaxy and Note devices compete against the iPhone, is "not an ideal environment" for Apple, but that Samsung is now the largest component supplier to Apple.

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