Qualcomm sought to turn out to be the only real provider of modem chips for Apple’s iPhone to recoup a $1-billion (roughly Rs. 7,000 crores) “incentive fee” that Apple insisted on, to not block rivals from the market, Qualcomm’s chief government testified on Friday.
The fee from Qualcomm to Apple – a part of a 2011 deal between Apple and Qualcomm – was meant to ease the technical prices of swapping out the iPhone’s then-current Infineon chip with Qualcomm’s, CEO Steve Mollenkopf testified at a trial with the US Federal Trade Commission.
Whereas such a fee is frequent within the trade, the dimensions of it was not, Mollenkopf stated.
Underneath the 2011 deal, Qualcomm was named Apple’s sole provider of modem chips, which assist cellphones connect with wi-fi information networks, in alternate for which Qualcomm agreed to offer Apple a rebate – the precise nature of which has not been disclosed. Apple may select one other provider however it might lose the rebate, successfully growing the price of its chips.
At a federal courthouse in San Jose, California, Mollenkopf testified that Apple demanded the $1 billion with none assurance of what number of chips it might purchase, which pushed the chip provider to pursue an exclusivity association in an effort to guarantee it offered sufficient chips to get better the fee.
Qualcomm was not aiming to dam rivals like Intel, he stated.
“The chance was, what would the amount be? Would we get every little thing we wished, provided that we paid a lot in incentive?” Mollenkopf testified.
Earlier within the day, Apple provide chain government Tony Blevins testified that it was Apple’s observe to pursue not less than two suppliers and as many as six for every of the greater than 1,000 parts within the iPhone.
The corporate stopped making an attempt to position an Intel modem chip within the iPad Mini 2 as a result of dropping the rebates on Qualcomm’s chips would have made the general value too excessive, he stated.
“They made it very unattractive for us to make use of one other chip provider,” Blevins stated of the rebates. “These rebates have been very, very giant.”
© Thomson Reuters 2019