Apple Demanded $1 Billion for Chance to Win iPhone Contract: Qualcomm CEO

Advertisement
By Reuters | Updated: 14 January 2019 10:50 IST
Highlights
  • Under the 2011 deal, Qualcomm was named Apple's supplier of modem chips
  • Qualcomm was not aiming to block rivals like Intel: Mollenkopf
  • Steve Mollenkopf testified at a trial with the US FTC on Friday

Qualcomm sought to become the sole supplier of modem chips for Apple's iPhone to recoup a $1-billion (roughly Rs. 7,000 crores) "incentive payment" that Apple insisted on, not to block rivals from the market, Qualcomm's chief executive testified on Friday.

The payment from Qualcomm to Apple - part of a 2011 deal between Apple and Qualcomm - was meant to ease the technical costs 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.

Advertisement

While such a payment is common in the industry, the size of it was not, Mollenkopf said.

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. Apple could choose another supplier but it would lose the rebate, effectively increasing the cost of its chips.

Advertisement

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.

At a federal courthouse in San Jose, California, Mollenkopf testified that Apple demanded the $1 billion without any assurance of how many chips it would buy, which pushed the chip supplier to pursue an exclusivity arrangement in order to ensure it sold enough chips to recover the payment.

Advertisement

Qualcomm was not aiming to block rivals like Intel, he said.

"The risk was, what would the volume be? Would we get everything we wanted, given that we paid so much in incentive?" Mollenkopf testified.

Advertisement

Earlier in the day, Apple supply chain executive Tony Blevins testified that it was Apple's practice to pursue at least two suppliers and as many as six for each of the more than 1,000 components in the iPhone.

The company stopped trying to place an Intel modem chip in the iPad Mini 2 because losing the rebates on Qualcomm's chips would have made the overall cost too high, he said.

"They made it very unattractive for us to use another chip supplier," Blevins said of the rebates. "These rebates were very, very large."

© Thomson Reuters 2019

 

Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.

Further reading: Qualcomm, Apple, Steve Mollenkopf
Advertisement

Related Stories

Popular Mobile Brands
  1. Huawei MatePad SE 11 Set to Launch at This Price in India
  2. OnePlus Nord 6 Could Launch in India at This Price
  3. Huawei Teases MatePad 11.5 Price in India Ahead of Launch
  4. OpenAI's Faster GPT-5.4 Mini and Nano AI Models Are Here: Details
  5. Vivo X300 Ultra, Vivo X300s Will Feature This New Colour Technology
  6. Oppo A6s 5G With 6,500mAh Battery Launched in India: See Price
  7. Jio Users Can Get Free Incoming SMS Abroad Using Wi-Fi Calling
  1. Russia Plans Venera-D Mission to Venus in 2036 With Lander, Orbiter, and Balloon Probe
  2. Realme C100i Spotted on NBTC Certification Database as Key Features Surface Online via Retailer Listings
  3. Huawei MatePad SE 11 Price in India Revealed as Company Confirms Imminent Launch in the Country
  4. Marshall Bromley 450 Launched in India With 360-Degree Sound, Up to 40-Hour Battery Life: Price, Features
  5. Oppo Find X9s Pro Reportedly Bags 3C Certification Ahead of Launch in China: Expected Specifications
  6. Itel Unveils Zeno AI Weaver Voice Recorder in India With Up to 40 Hours Recording Capacity, Live Transcription
  7. UK Parliamentary Committee Seeks Temporary Ban on Crypto Donations Over Foreign Influence Risks
  8. Laalo: Krishna Sada Sahaayate Out on OTT: Know Where to Watch it Online
  9. Google’s Personal Intelligence Is Now Rolling Out to More Users
  10. Dreame L40 Ultra AE Robot Vacuum With 19,000Pa Vormax Suction Launched in India, Dreame D20 Ultra Tags Along
Download Our Apps
Available in Hindi
© Copyright Red Pixels Ventures Limited 2026. All rights reserved.