Qualcomm CEO Bombarded Apple: Give a $1 billion rebate for exclusive orders

 Qualcomm CEO Bombarded Apple: Give a $1 billion rebate for exclusive orders

Netease Technologies News, Jan. 12, according to foreign media reports, the CEO of Qualcomm, an American chip manufacturer, testified on Friday that Qualcomms attempt to become the sole supplier of modem chips for Apples iPhone was not to prevent competitors from entering the market, but to compensate for the loss of Qualcomm caused by the $1 billion reward Apple insisted on.

Qualcomms payment to Apple was part of an agreement between the two companies in 2011. Steve Mollenkopf, chief executive of Qualcomm, testified at the FTC trial that Qualcomm paid Apple to reduce the technology cost of replacing Infineon, the semiconductor company used by the iPhone, with Qualcomm chips.

Morenkopf said that although such payments are common in the industry, the amount is very large.

According to the agreement signed by the two companies in 2011, Qualcomm was designated as Apples sole supplier of modem chips, which help mobile phones connect to wireless data networks. In exchange, Qualcomm agreed to give Apple a rebate - details of the rebate have not been disclosed. Apple can choose another supplier, but it will lose this rebate, which will actually lead to an increase in the cost of chips used by Apple.

In response to the action between Qualcomm and Apple, antitrust regulators alleged that the deal with Apple was part of Qualcomms anti-competitive behavior model, with the aim of maintaining its dominance in the modem chip market and excluding competitors such as Intel.

In a federal district court in San Jose, California, Morenkopf testified that Apple demanded $1 billion but was uncertain about how many chips it would buy, forcing Qualcomm to seek an exclusive agreement to ensure that it sold enough chips to recover the payment.

Morenkopf said Qualcomms goal was not to stop competitors like Intel.

Our risk is, what is the purchasing volume of [Apples] Qualcomm? As Morenkopf testified, Can we get everything we want because we pay so much money to Apple?

Earlier on Friday, Tony Blevins, the head of Apples supply chain, testified that Apples approach was to have at least two suppliers for each of the more than 1,000 components of the iPhone, up to six suppliers.

Blavins said Apple stopped trying to use Intel modem chips in the iPad Mini2 because the rebate on losing Qualcomm chips would make the overall cost too high.

They made us less willing to switch to another chip supplier, Blevins said of Apples discounts from Qualcomm. These discounts are very, very large. (Tianmen Mountain)

Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541