At Trial Today Qualcomm's CEO turned the tables on Apple and pointed to their Greedy Demands that Forced an Exclusivity Deal
Late today Patently Apple posted a report titled "Apple Executive Testified today that the company Considered MediaTek and Samsung 5G Modems for 2019 iPhones." This evening more about today's FTC vs. Qualcomm testimony is being revealed.
According to Reuters, "The payment from Qualcomm to Apple - part of a 2011 deal between Apple and Qualcomm - was meant to ease the technical costs of swapping out the iPhone’s then-current Infineon chip with Qualcomm’s, CEO Steve Mollenkopf testified at a trial with the U.S. Federal Trade Commission. Mollenkopf added that While such a payment is common in the industry, the size of it was not.
Under the 2011 deal, Qualcomm was named Apple’s sole supplier of modem chips, which help mobile phones connect to wireless data networks, in exchange for which Qualcomm agreed to give Apple a rebate - the exact nature of which has not been disclosed. Apple could choose another supplier but it would lose the rebate, effectively increasing the cost of its chips.
Apple's supply chain executive Tony Blevins had testified earlier in the day that "They made it very unattractive for us to use another chip supplier,” Blevins said of the rebates. "These rebates were very, very large."
At a federal courthouse in San Jose, California, Mollenkopf testified that Apple demanded the $1 billion without any assurance of how many chips it would buy, which pushed the chip supplier to pursue an exclusivity arrangement in order to ensure it sold enough chips to recover the payment. Qualcomm was not aiming to block rivals like Intel, he said.
"The risk was, what would the volume be? Would we get everything we wanted, given that we paid so much in incentive?" Mollenkopf testified.