The battle between Apple and Qualcomm is intensifying, with Qualcomm claiming that Apple is set to stop making licensing payments related to the iPhone.
The result of this is that Qualcomm will have to revise its earnings forecasts to give a smaller number, due to Apple cutting off one of its major sources of revenue until the dispute is resolved.
“While Apple has acknowledged that payment is owed for the use of Qualcomm’s valuable intellectual property, it nevertheless continues to interfere with our contracts,” said Don Rosenberg, Qualcomm’s general counsel. “Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade.”
The Qualcomm feud so far
Qualcomm has long been the company behind the wireless chips used in iPhones, iPads and other Apple devices. However, the relationship went south earlier this year when Apple filed a $1 billion lawsuit against the chipmaker.
According to Apple, Qualcomm has been charging charging royalties on technology it does not own. Since then, Qualcomm has hit back with a lawsuit of its own, claiming Apple is misleading and has breached its contract with the company.
While both Qualcomm and Apple are tech giants, Qualcomm has undoubtedly come off worst so far in the standoff — at least from a financial perspective. Shares in the company lost 14 percent of their value within days of the Apple lawsuit being announced, while discussion about the dispute took up the entire first 20 minutes of Qualcomm’s most recent earnings call.
According to its revised earnings forecast, Qualcomm will bring in revenue of $4.8 billion-$5.6 billion for its third fiscal quarter. This is down from the $5.3 billion-$6.1 billion it had previously expected.
We firmly expect this one to drag out for quite some time!