Apple Inc has sued their supplier Qualcomm for $1 billion on Friday and have accused the company of refusing to pay promised rebates of almost one billion dollars and for overcharging for chips.
A few days earlier the government of United States had also accused Qualcomm for adopting anticompetitive tactics in order to acquire a major share in the semiconductor market of mobile phones.
Qualcomm supplies chips that enable the phone to connect with wireless networks to both Samsung Electronics Co Ltd and Apple Inc. Qualcomm generated a hefty $23 billion revenue in their last fiscal year and almost 40% of this revenue was from Samsung and Apple alone.
Apple has said in the lawsuit: “If that were not enough, Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments to Apple. Apple refused.”
Apple has also said that Qualcomm made sure that other manufacturers could not make these chips as it refused to license the technology, the patent that Qualcomm has requires the technology to be licensed on reasonable terms.
Network carriers were also pressurized not to sell Apple devices with Intel chipset from Qualcomm, according to Apple.
In December last year Qualcomm was fined $854 million for unfair licensing practices by the Korea Free Trade Commission. China fined the company $975 million which it paid in February 2015, whereas European Union has also accused it for taking unfair advantage of its power.
Before the release of iPhone 7 in September Qualcomm was the only modern chip supplier for Apple, almost half of the modern chips in iPhone 7 have been supplied by Intel.
Qualcomm has denied all accusation by Apple and have called them baseless, in a statement the company said:
“Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information,” Rosenberg said in the statement.
“We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”