Qualcomm lowers its profit forecast, as Apple won't pay royalties
by Damian M. / Apr 28, 2017, 8:00 AM
It all started back in January, when Apple filed three law suits against one of the biggest mobile chip makers, Qualcomm. One was for unpaid royalties, the second was for abuse of power over the market, and the third said that the chip maker didn't follow through on promises to license its standard essential patents at a reasonable price. Of course, Qualcomm didn't just sit idly, and filed counterclaims against Apple for a variety of reasons.
Now, new information has been released by Qualcomm, which hurts not only the chip-making company and Apple, but everyone caught in the middle too. According to a press release, Apple is withholding royalties for Q1 2017 to its contract manufacturers that have a direct relationship with Qualcomm.
This means that intermediary contractors that use Qualcomm silicon to produce components for the iPhone 7 and iPhone 7 Plus are not being paid for their work, and can't pay the chip maker what they owe it. According to the statement, Apple has claimed that it will not pay up until the conflict between the two behemoths is resolved.
This forced Qualcomm to reevaluate its profit forecast for Q2 2017. The company expected a profit between $5.3 and $6.1 billion, but after Apple's owed payments were removed from the forecast, it now stands at $4.8 - $5.6 billion.
Additionally, Qualcomm's shares fell 4.3% to $50.91 in premarket trading today, while Apple's rose to $143.92.
However, both Apple and Qualcomm have plenty of other revenue streams. Such a turn of events will not harm either of the companies too badly. Who really suffers from these barred payments are the smaller companies in the middle. Not only are they not getting the money they need to pay to Qualcomm, but they're barred from receiving their own royalties as well.
It sure seems that neither company is ready to back out just yet. But while the two titans duke it out in court, you can't help but wonder how many innocent casualties this war will take.
source: Qualcomm via Reuters
Posts: 7469; Member since: Feb 17, 2016
s**t just got real...
posted on Apr 28, 2017, 8:14 AM 0
Posts: 17093; Member since: Jun 17, 2009
Yeah, real asinine. This is the kind of crap that Apple pools that makes me not like them.
posted on Apr 28, 2017, 9:57 AM 13
posted on Apr 28, 2017, 5:56 PM 0
Posts: 3231; Member since: Oct 03, 2015
Hi iHypocrite, I thought you hated people bringing Apple in non-Apple articles? Why bring Samsung in a non-Samsung article? LOL Then you have the balls to call others hypocrites LMAO. Sadly not literal balls.
posted on Apr 28, 2017, 6:20 PM 13
Posts: 1337; Member since: Oct 05, 2011
This is really unfair to theses smaller manufactures. Apple should do the right thing here - if you owe royalties, that you agree to, then please pay. Yes QC has patents on modems that belong to them ( they did the R&D they applied for these patents) and they don't have to be used by Apple. Apple can just assuredly use Intel or Samsung base SoC with different modems. Yes QC may exerciser undue pressure on other chip makers and should be investigated but the same applies to Apple for signing contracts then crying that the terms are unfair and that they should get the tech for pennies because it is an essential patent.This is just sad and hurts everyone in the industry
posted on Apr 28, 2017, 8:25 AM 8
Wait, I think you missed the point - Apple doesn't pay the intermediary contractors - Qualcomm does. It's misworded - those companies don't get paid because Qualcomm isn't paying them - not Apple. Apple hired Qualcomm, qualcommuses other companies to build for Apple. Apple doesn't pay Qualcomm - other companies don't get paid. Qualcomm should keep its promises - now smaller companies are affected. If I hired a painter and that painter did a bad job - I'm not paying them, unfortunately that painter's employees don't get paid either. It was the painters job to make sure the job is done as agreed on contract. If the painter messed up - he should still pay his own employees - not me, since I didn't get what I was promised. Geez, gain up on Apple again - do some research first.
posted on Apr 28, 2017, 12:40 PM 0
Wrong! Apple pays the intermediary contractors, who pay Qualcomm. Not the other way around. Your whole painter analogy is idiotic anyway. One day, someday, hopefully, you will actually get something right. You're the one who missed the point and it was worded correctly. Your credibility, which was at zero, has now taken a dive into negative territory. Geez, - do some research first "The payments made by Apple to its contract manufacturers are, in turn, owed by the contractors to Qualcomm in royalties, according to the chipmaker's licensing business model." - Reuters...aka the source article that you didn't care to read before spewing falsehoods across the internet like you always do.
posted on Apr 28, 2017, 1:39 PM 7
So I got the parties reversed, my point still stands!!! Let me simplify this for you: If I order something and you don't deliver it as I preferred - I won't pay, regardless where and how you got it and who you owe money to in order to get it. And stop with your damn insults - it's annoying.
posted on Apr 28, 2017, 6:45 PM 0
Your point was based entirely on who was or wasn't paying the small contractors. In what way is your analogy remotely applicable? Qualcomm gives Apple the technology, just as they have been doing for years. Now, because of a completely unrelated law suit from back in January, Apple doesn't want to pay for what they are happily using today. In your words, Apple is indeed getting "exactly what was promised". You make no sense. It shows that you will put your credibility on the line to defend Apple even when you have no idea what you're talking about. "Stop with the insults"...and all the while you're telling other commenters to go do some reasearch.....and all the while you're the one who is clueless. Your constant uniformed posts are annoying and a bigger waste of time to read than a post from Techie.
posted on Apr 28, 2017, 7:46 PM 6
f**k it. No way to get out from what I said (I tried to save face - fell flat on it). Screwed up! I've read some misinforming posts on other sites. Got home did more reading on the topic. All I said above is false when it comes to this topic. Makes more sense now. Dick move by Apple. I always side with contract - if two parties agree on contract - ITS THE LAW!... regardless of how any party feels about it later (which is what Apple is doing here). Now I see Apple is using their "big guy" position to muscle Qualcomm. Take care, Willard.
posted on Apr 28, 2017, 9:52 PM 2
Posts: 2137; Member since: Oct 18, 2011
By withholding payment to certain vendor isn't apple also guilty for "... abuse of power over the market...".
posted on Apr 28, 2017, 8:26 AM 14
Posts: 1182; Member since: Dec 24, 2011
This is a two sided story, the contract was made with those points listed, so Qualcomm has broke the contract first, That wouldn't justify Apple not paying, but hey, Apple was never the nicest guy at a party when a fight between the two break out.
posted on Apr 28, 2017, 10:16 AM 1
Posts: 17093; Member since: Jun 17, 2009
How does it justify Apple not paying other vendors? Its an ass move, and a true answer of market power.
posted on Apr 28, 2017, 11:12 AM 2
Bottom line: Qualcomm hasn't broken anything from the years old licensing agreement. Apple is pissed about something completely unrelated to the agreement. So, no one knows what he's talking about because he's making up a breach of contract that doesn't exist. In fairness, he's not the only person to make up some sort of contract violation in commenting on this article. But when you ask what part of the agreement Qualcomm violated.....crickets. Apple fans will chase ghosts just to try to defend them.
posted on Apr 28, 2017, 10:01 PM 0
Posts: 1131; Member since: Sep 28, 2016
Lol The sense of self entitlement from Apple is ridiculous.
posted on Apr 28, 2017, 10:17 AM 5
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