Company / division: Qualcomm
Qualcomm Seeks iPhone Sales and Manufacturing Ban in China (Oct 13, 2017)
Qualcomm has announced that it’s filed lawsuits in China seeking a ban on iPhone sales and manufacturing in the country, the latest salvo in the ongoing dispute between the two over patent royalty payments. Qualcomm previously requested the International Trade Commission to ban the import of Intel-based iPhones into the US, and importantly the Chinese government earlier fined Qualcomm on antitrust grounds, so it’s not necessarily disposed to siding with it in this case. However, Qualcomm has been among a set of companies looking to curry favor with the Chinese government, so it’s possible that the Chinese government might look more favorably on such a request. On balance, though, I think it’s unlikely that Qualcomm will prevail here given its history not only in China but elsewhere around these antitrust issues, though of course a successful ban would be a huge blow to Apple in China, so it’s understandable why Qualcomm would seek it as a way to gain leverage in the case.
Qualcomm Fined $773m by Taiwan for Antitrust Violations (Oct 11, 2017)
Following existing investigations and/or action over antitrust issues against Qualcomm in the US, South Korea, and China, Taiwanese authorities have issued a $773m fine against the company over the same issues. The government’s Fair Trade Commission found that Qualcomm acted anticompetitively when it forced licensees for its standards-essential patterns to accept onerous terms as a condition of licensing. The fine relates to a 7-year period in which the FTC says Qualcomm was paid around $13 billion by Taiwanese manufacturers (presumably HTC and contract manufacturers like Foxconn). This antitrust situation is going more and more badly for Qualcomm, but the biggest outstanding case is of course its fight with Apple, which is withholding its own and contractors’ royalties from the company pending the outcome of various lawsuits. It’s hard to see this all going Qualcomm’s way at this point, and it feels like it’s mostly a question of how much the royalty rate will end up being reduced, and therefore what the financial hit will be.
Apple Wins First Small Battles in Court Against Qualcomm (Sep 22, 2017)
I haven’t seen much coverage of this today, but it appears that Apple won a first couple of small battles in its various lawsuits with Qualcomm. A California judge ruled that Apple’s supply chain partners don’t have to pay the royalties they’re currently withholding until such a time as the proper amounts to be paid have been determined, and Qualcomm was also denied its request to end the litigation being pursued separately by Apple in other countries. These are initial steps in what’s going to be a potentially long and complex set of court cases between the companies, but it’s possible that the companies will end up settling once it becomes clearer which way the legal wind is blowing, and they would then likely drop all outstanding litigation. By themselves, these first decisions aren’t indicative of which way things are going to go, but they do put increased financial pressure on Qualcomm, which has seen reported revenues drop as Apple’s partners withhold royalties, which will likely push it to move to settlement sooner rather than later, something that’s probably good news for Apple.
via Apple Insider
Qualcomm reported its results for the June 2017 quarter today, and revenues and profits were both down, in large part because of the various antitrust and other disputes and legal proceedings in which it’s involved. Shortfalls in revenue from Apple, several of its suppliers, and a Chinese customer each caused problems, but it also had to pay out to both BlackBerry and the Korean government over separate disputes. It’s impossible to look at Qualcomm today without noticing the massive cloud of uncertainty and potential financial liability associated with these various cases. On a non-GAAP basis, the company’s results are holding up rather better, though still not stellar. As with Samsung, its semiconductor business was an area of strength, but its core MSM chip sales continue to decline over time as the smartphone market matures, while the broader opportunity it has in CDMA and related technologies continues to grow. Meanwhile, Apple, its suppliers, and Qualcomm all filed new suits over the last couple of days in relation to their dispute, even as Qualcomm’s CEO was quoted earlier this week as saying he expected the case eventually to end in a settlement.
via Financial Times
Apple Adds New Claims to Qualcomm Lawsuit (Jun 20, 2017)
I’ll start with my usual caveat on so-called “gigabit” wireless services: though theoretical throughputs on devices with the new modems being discussed here can reach gigabit per second speeds, the real-world experience is going to be a fraction of that. In other words, even if the reporting in this article is correct, Apple isn’t going to be missing out on true gigabit speeds any more than the other device vendors will have them. The second caveat is that even the more realistic speeds will only be available where carriers have upgraded their networks to support them, which will be far from everywhere for the near future. With those caveats out of the way, though, Apple will be one of the few device vendors out there without these faster modems in its devices over the next year. However, as the article rightly points out, Apple has rarely been willing to put cutting edge new modem technology in its devices at the same time as others, generally preferring to wait for the technology to mature before deploying it, as it notably did with both 3G and LTE. There is, of course, this time also the added complication of Qualcomm being the only supplier with a gigabit modem ready to go, and the fact of Apple’s very adversarial relationship with Qualcomm and its decision last year to introduce Intel modems. I’m inclined to believe the reporting here is accurate, but I’m not sure it’s really all that significant – in real-world experience, there will be very little difference for many customers over the next couple of years, and Apple will almost certainly jump on the gigabit modem bandwagon next year, likely through Intel.
Apple Hires Senior Qualcomm Engineer as Wireless SoC Lead (May 29, 2017)
Though Google spent much of its I/O keynote talking about apps and features like Photos and the Assistant, it did devote a few minutes to the topic of AR and VR, which will have a second deeper-dive keynote of their own tomorrow. On the VR side, the key announcement is that Google is extending the Daydream platform beyond mobile VR to standalone headsets, which in the first instance will be built by partners Lenovo and HTC and supported with chips from Qualcomm. Daydream so far has been limited by the fact that the biggest Android smartphone vendor has its own competing platform, so the news that Samsung’s Galaxy S8 phones will support Daydream through a software update in the summer is a big deal. My guess is that Samsung will still favor its own Gear VR system with its usual bundling and discounting deals, but the fact that Daydream View and other compatible headsets will now work with Samsung devices should increase its appeal. Daydream’s system is better than Samsung’s in a number of ways, though the recent Gear VR update closes the gap a bit, so the playing field should be a leveled a little going forward. Also worth noting are a couple of AR announcements, including a new “Tango phone” to support Google’s indoor mapping technology, and VPS, an indoor equivalent of GPS which will enable precise directions within large stores and the like. Neither of those feels remotely mass market yet, which means Google’s AR efforts are far more marginal than the phone-based efforts from Facebook and Snapchat (and likely soon Apple too). Interestingly, VR head Clay Bavor outlined his vision for the space in a blog post today too, and it’s remarkably similar to Microsoft’s in that it envisions a continuum or spectrum that includes both VR and AR, though Bavor’s favored term is immersive computing rather than mixed reality and he’s less pejorative about the VR and AR terms everyone is already using.
Microsoft Announces Details Around Windows 10 on ARM (May 12, 2017)
In commenting on Qualcomm’s recent earnings report, I mentioned that if Apple and its suppliers continued to hold back royalty payments as part of their dispute, Qualcomm would be affected more severely in future quarters than in Q1, and that has now proven to be the case. In Qualcomm’s original guidance for this quarter, it had said that its guidance range didn’t include a scenario where it received no payments at all from these companies, but it now appears that’s the scenario that’s playing out. Apple has said it won’t make any payments until the dispute is resolved and new royalty rates set, which is a great way to put pressure on Qualcomm to either settle quickly or at least move the court case along swiftly, but means Qualcomm will be severely impacted in the meantime. It’ll be very interesting to hear Apple’s commentary on all this on its earnings call next Tuesday because it will have to set aside at least some of the amounts due as a contingency, and I’m curious to see how that affects its reported costs and margins.