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.

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.

Advertisement

"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. Bumble Changes Its Biggest Rule: Men Can Now Make the First Move
  2. Android 17 Update: These Motorola Phones Are Eligible
  3. Realme 16x 5G Debuts in India With MediaTek Dimensity 6300 SoC
  4. Realme 16x 5G Review: Aesthetics With a Big Battery Bet
  5. Amazon Freedom Sale 2026: Check Best Last-Minute Smartphone Deals
  6. Amazon Great Freedom Sale 2026: Top Deals on Gaming Peripherals
  7. Vivo X300 FE Gets a New RAM and Storage Option in India: See Price
  8. Vivo X500 Series Details Leak as iQOO 16 Gets 3C Certification
  9. Harmony Considers Rollback Following Suspected ONE Token Exploit
  1. Apple Arcade Announces Block Blast!+, Art of Fauna: Cosy Puzzles+ and More Games: All You Need to Know
  2. Honor Robot Phone Launched With Snapdragon 8 Elite Gen 5 SoC, 200-Megapixel Gimbal Camera: Price, Features
  3. Binance Rejects Claim of Withdrawing Singapore Lawsuit Against RedotPay
  4. Harmony Plans Blockchain Rollback After Hacker Allegedly Mints Nearly 4 Billion ONE Tokens
  5. Xbox CEO Calls The Elder Scrolls 6 'Incredible' After Seeing Live Playthrough, Teases Official Subtitle
  6. Bumble Changes Its Women-First Dating Model, Now Lets Anyone Send the First Message
  7. Amazon Great Freedom Sale 2026: Best Deals on Storage Devices
  8. Amazon Great Freedom Sale 2026: Best Deals on Smartphones Under Rs. 20,000
  9. BGMI Redeem Codes: How to Claim Mecha Ant Backpack, Free Rewards, Skins, UC, and More
  10. Vivo X500, iQOO 16 Reportedly Get 3C Certification Ahead of Expected Launch
Download Our Apps
Available in Hindi
© Copyright Red Pixels Ventures Limited 2026. All rights reserved.