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Qualcomm May Try Stopping New iPhones From Coming Into The US

This article is more than 6 years old.

In the ongoing legal battle over patents between Apple and Qualcomm, it appears Qualcomm may try going with the nuclear option.

According to a report from Bloomberg, the San Diego, California-based chipmaker is preparing to ask the International Trade Commission to block the import of iPhones manufactured in Asia from getting into the United States.

Qualcomm declined to comment and Apple didn't respond to a request for comment.

Qualcomm is said to be responding to Apple's decision to stop paying the company any license fees to Qualcomm until the patent dispute is settled. Last week, Qualcomm let its investors know of Apple's decision and estimated it will hit its upcoming third-quarter sales for a half-billion dollar.

If Qualcomm decides to go this route, this will certainly hurt the company's chances from providing future modem chips in the iPhone. Qualcomm had been the sole supplier of modems going into the iPhone for several years until Intel started appearing in some versions of the iPhone 7 released last year. Analysts anticipate Intel will take up an increasing percentage of modems, which is an expensive component, in upcoming iPhones.

Qualcomm is the dominant supplier of modem chips that enable phones to hook up to cellular networks, but the company also extracts licensing fees for nearly every modern phone in the world. Roughly two-thirds of its profits come from the licensing business.

If Qualcomm is successful in enacting the ban, the impact for Apple could be catastrophic. The US market takes up 40% of Apple's sales.

Tech analyst Patrick Moorhead suspects Qualcomm might have difficulty appealing to the ITC to block iPhone imports, because the company is under antitrust investigations by various governments -- including the US, the EU and South Korea -- for how it licenses its technology.

“It could be looked at as Qualcomm being the bad actor here,” Moorhead said.

The legal fight between the two began in January when Apple filed a lawsuit against Qualcomm alleging the chipmaker "has unfairly insisted on charging royalties for technologies they have nothing to do with." Apple claimed, among other things, that Qualcomm withheld $1 billion from the company as retaliation for working with Korean regulators in an investigation against Qualcomm.

In Qualcomm's countersuit, filed last month, the company denied the charges and brought a number of its own accusations, including that Apple mounted a large-scale regulatory attack against the company with the help of companies like Samsung. To get regulators to act against the company, Apple provided false and misleading statements to government regulators, Qualcomm claimed.

Some analysts speculate that Apple’s decision to ramp up its fight against Qualcomm’s license fees may proceed Apple developing its own modem, a complicated piece of wireless technology that has to support many different standards across the globe.

“This is all part of Apple’s overall strategy to have the best experience,” said Moorhead. “They believe to have the best experience, they have to have control over all the chips. For Apple to develop their own modem, they would still have to pay license fees to Qualcomm as well as to Nokia and Ericsson.”

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