[notafraudster]

Almost ten years ago now, Qualcomm and Apple began suing each other. Apple's position was Qualcomm was playing hardball with patents that ought have a FRAND license. Qualcomm's position was Apple was being mean, and then also to sue various downstream part contractors for not paying royalties they claimed were owed to them but that Apple was contesting. In general Apple won more of the litigation than they lost (but not all), and the litigation eventually ended in a large settlement. But Apple said at the time of the settlement, that it was untenable to have to source all of their LTE stuff from Qualcomm and they planned to secure their supply chain in the coming years. This is that statement now coming to fruition.

So in toto, my impression is that this isn't fundamentally about seeking any particular cost savings or technical difference, so much as it Apple trying to disentangle themselves from external suppliers who they view as hostile or undependable.

[tooltalk]

First, Apple is known to squeeze every penny from their suppliers to improve their bottom line.

Second, likewise, Apple sued every single wireless patent holders (eg, Nokia, Ericsson, Qualcomm, etc) to negotiate better licensing terms -- but, to be fair, it's not uncommon for other smartphone OEMs to do so in court.

Third, Apple's legal argument was always that Qualcomm's per-device (ie, final product) royalty basis licensing offer was not FRAND. Apple believes that the royalty should be based on the cost of Qualcomm's chips instead. But, of course, there is no legal basis or industry practice to support Apple's unfounded claim and, consequently, LOST EVERY lawsuit based on this claim for past 10+ years.

Fourth, "... then also to sue various downstream part contractors ..." No, you don't sue everyone in supply-chain. The wireless patent holders collect their royalty only once and at the top of the supply-chain, ie, smartphone OEMs, to maximize their profit. and that's been the industry practice for much of the past 25+ years (possibly even longer).

Fifth, "... it was untenable to have to source all of their LTE stuff from Qualcomm ..." Umm.. Stop, stop, stop!

So in conclusion, it's all about saving Apple's margin, that's all. I don't blame any company for trying to minize their cost, but the recent event with Qualcomm, ie, FTC's attack on Qualcomm with Apple orchestrating behind the curtain, was highly unethical and abuse of their political power.

PS. insulting languages removed

[doix]

> First, Apple is known to squeeze every penny from their suppliers to improve their bottom line.

This is just unequivocally false. I used to work for a semiconductor company that was a supplier for Apple. Apple would pay a premium compared to other companies.

The semiconductor game is kind of rigged, assuming you don't have your own fab, everyone knows your costs. They know how much a wafer costs and they know the size of your device, so they have a pretty good idea of what it costs you per device (they don't know your yield, but can guess a range).

Everyone uses that information to keep your profit margins fairly low. Apple would pay a premium compared to other manufacturers. You could probably look at the financial reports of various apple suppliers and reverse engineer that information.

Apple is extremely risk averse, them making their own modems is almost certainly about reducing supply chain risk.

Profit margins will be lower down on the priority list. They can just increase the price of the phone to improve those.

For the record, I am not an Apple fan, I disliked working for one of their suppliers and dislike their products. But they do pay their suppliers a premium.

[j16sdiz]

> Third, Apple's legal argument was always that Qualcomm's per-device (ie, final product) royalty basis licensing offer was not FRAND. Apple believes that the royalty should be based on the cost of Qualcomm's chips instead. But, of course, there is no legal basis or industry practice to support Apple's unfounded claim and, consequently, LOST EVERY lawsuit based on this claim for past 10+ years.

Did you check FTC v Qualcomm antitrust case? Can you stop your lies?

[kevin_thibedeau]

> Apple believes that the royalty should be based on the cost of Qualcomm's chips instead

Sounds great. Apple should also base their app store tax on the cost of hosting.

[sonofhans]

You know, you can disagree without including the insulting language. That will lead to more and better discussion.

[GeekyBear]

> Apple's legal argument was always that Qualcomm's per-device (ie, final product) royalty basis licensing offer was not FRAND. Apple believes that the royalty should be based on the cost of Qualcomm's chips instead. But, of course, there is no legal basis or industry practice to support Apple's unfounded claim and, consequently, LOST EVERY lawsuit based on this claim for past 10+ years.

Qualcomm demanded a percentage of the retail selling price of phones using it's modems.

Similarly, Google bought Motorola for it's patent portfolio and famously lost a lawsuit against Microsoft after demanding a 2.5% cut of the retail cost of Microsoft hardware (estimated to be about 4 Billion dollars a year) using it's standards essential patents.

> Motorola sent a letter to Microsoft asking it to pay as much as $4 billion per year to license patents relating to the 802.11 standard that underpins Wi-Fi and the H.264 video encoding standard.

https://www.computerworld.com/article/2955773/microsoft-best...

Google lost the case and the appeal, and the courts imposed a flat 3 million dollar per year licensing fee instead of the ~4 Billion a year that Google demanded.

https://www.vox.com/2015/7/30/11615248/google-loses-bid-to-o...

So, this is hardly an unfounded claim.

[kasabali]

Please disclose if you're invested in Qualcomm in any way.

[bombcar]

Apple has enough cash on hand to buy 1/3 to half of Qualcomm but the government would likely shut that down quite quickly.

So they’ll roll their own. They built a CPU so a modem shouldn’t be incredibly difficult.

[nerdjon]

This isn't quite them just building their own. Or at least presumably.

in 2019 they bought the modem business from Intel.

[crazygringo]

Thank you! That's incredibly helpful context.

[mschuster91]

Interesting that no one talks about the elephant in the room - why are technologies for supposed public standards patentable in the first place?

IMO, all standards that are mandated to be used by a government or a regulatory agency should be patent and royalty free and accessible by everyone, alone to have a healthy competition space instead of (effectively) a Qualcomm monopoly on the vendor side.

[giantrobot]

> why are technologies for supposed public standards patentable in the first place

Because they were developed in private by the stakeholders and then submitted as part of the standardization process. Money did get spent. At the core of the situation is multiple private companies all contribute technology towards a standard that a larger group of companies can implement. Without the option of license fees there's little incentive for companies to invest in developing these technologies.

Part of the standardization process is making the patent licenses available at a "fair and reasonable" rate (FRAND). When the patent holders have large patent pools of their own they cross-license in lieu or in addition to paying actual license fees.