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posted by martyb on Friday May 31 2019, @07:33PM   Printer-friendly
from the looks-like-that-chip-has-sailed dept.

In 2005, Apple contacted Qualcomm as a potential supplier for modem chips in the first iPhone. Qualcomm's response was unusual: a letter demanding that Apple sign a patent licensing agreement before Qualcomm would even consider supplying chips.

"I'd spent 20 years in the industry, I had never seen a letter like this," said Tony Blevins, Apple's vice president of procurement.

Most suppliers are eager to talk to new customers—especially customers as big and prestigious as Apple. But Qualcomm wasn't like other suppliers; it enjoyed a dominant position in the market for cellular chips. That gave Qualcomm a lot of leverage, and the company wasn't afraid to use it.

[...] Last week, a California federal judge provided the FTC and Apple with sweet vindication. In a scathing 233-page opinion [PDF], Judge Lucy Koh ruled that Qualcomm's aggressive licensing tactics had violated American antitrust law.

[...] "Qualcomm has monopoly power over certain cell phone chips, and they use that monopoly power to charge people too much money," says Charles Duan, a patent expert at the free-market R Street Institute. "Instead of just charging more for the chips themselves, they required people to buy a patent license and overcharged for the patent license."

Now, all of that dominance might be coming to an end. In her ruling, Koh ordered Qualcomm to stop threatening customers with chip cutoffs. Qualcomm must now re-negotiate all of its agreements with customers and license its patents to competitors on reasonable terms. And if Koh's ruling survives the appeals process, it could produce a truly competitive market for wireless chips for the first time in this century.

Source:
https://arstechnica.com/tech-policy/2019/05/how-qualcomm-shook-down-the-cell-phone-industry-for-almost-20-years/


Original Submission

Related Stories

Intel Selling Off Smartphone Modem Assets 6 comments

Thanks, Apple: Intel will auction off smartphone modem patents, exit industry

Back in April, Apple announced that it would cease all litigation against chip manufacturer Qualcomm and enter a new partnership with the company that will see Qualcomm modems installed in new crops of iPhones.

On that same day, Intel announced it was exiting the smartphone modem business entirely. Now, according to IAM, Intel is going one step further and auctioning off many of its smartphone modem assets.

This information appears to suggest that without Apple as a partner, Intel has no need for its patents surrounding smartphone modems at all.

According to IAM, the Intel auction will see some 8,500 patents up for sale to the highest bidder.

Also at Tom's Hardware and Wccftech.

Previously: Apple Could Switch From Qualcomm to Intel and MediaTek for Modems
Intel Speeds Up Rollout of 5G Modems
A Billion-Dollar Question: What Was Really Behind Qualcomm's Surprise Ten-Digit Gift to Apple?
Apple's Internal Hardware Team is Working on Modems Now
Intel and Qualcomm Announce 5G Modem Modules for M.2 Slots
Intel Quits 5G Modem Business Hours after Apple Settles with Qualcomm
Qualcomm Will Pocket Almost $5 Billion from Apple Settlement this Quarter
How Qualcomm Shook Down the Cell Phone Industry for Almost 20 Years


Original Submission

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  • (Score: 5, Interesting) by Snotnose on Friday May 31 2019, @07:48PM (4 children)

    by Snotnose (1623) on Friday May 31 2019, @07:48PM (#849941)

    I was at Qualcomm in '06 or '07 when we suddenly got a hot new secret project. Potential customer was huge, one of the biggest Qualcomm had. They wanted a lot of tweaks to our silicon. Nothing major, just a lot of little stuff. The fact that this tweaked silicon wouldn't be available to anyone else tells you a lot about how important this potential customer was.

    2 things were emphasized. First, we couldn't talk about the project to anyone outside the group. Preferably nobody else even knew we were a group. Second, we weren't allowed to speculate on who the potential customer was. But we all knew who it was.

    After 3-4 months of "do this", "nope, do that instead", and "we think they'll like this" (we never did get a solid spec on what was wanted) we got disbanded, the potential customer went in a different direction. 6 months later the iPhone came out.

    --
    Why shouldn't we judge a book by it's cover? It's got the author, title, and a summary of what the book's about.
    • (Score: 2) by Snotnose on Friday May 31 2019, @11:20PM (2 children)

      by Snotnose (1623) on Friday May 31 2019, @11:20PM (#849997)

      I should point out I was in no way management, I was a high level software worker bee. My job was to track silicon changes and update the software as needed. The job I'd had for 1-2 years before this mystery client ever showed up.

      I had no inside knowledge on anything, just stuff that affected my job.

      --
      Why shouldn't we judge a book by it's cover? It's got the author, title, and a summary of what the book's about.
      • (Score: 0) by Anonymous Coward on Friday May 31 2019, @11:34PM (1 child)

        by Anonymous Coward on Friday May 31 2019, @11:34PM (#850002)

        We will be in touch.

        -- Posted from my iPwn

        • (Score: 4, Funny) by Snotnose on Saturday June 01 2019, @01:01AM

          by Snotnose (1623) on Saturday June 01 2019, @01:01AM (#850028)

          If your name is Steve M. or Jim T. then you can buy me dinner at Ruths Chris or somesuch, otherwise I'm good :)

          If you see me you'll know me, I've worked with both of you.

          --
          Why shouldn't we judge a book by it's cover? It's got the author, title, and a summary of what the book's about.
    • (Score: 2) by JoeMerchant on Saturday June 01 2019, @03:47AM

      by JoeMerchant (3937) on Saturday June 01 2019, @03:47AM (#850078)

      Yet another view: it's not a shakedown when it's legal.

      --
      🌻🌻 [google.com]
  • (Score: 0) by Anonymous Coward on Friday May 31 2019, @08:21PM (1 child)

    by Anonymous Coward on Friday May 31 2019, @08:21PM (#849953)

    Can anyone explain why this post isn't showing up:

    • (Score: 0) by Anonymous Coward on Friday May 31 2019, @08:26PM

      by Anonymous Coward on Friday May 31 2019, @08:26PM (#849956)

      It's the secret invisible text for writing about secrets.

  • (Score: 2) by krishnoid on Friday May 31 2019, @09:57PM (3 children)

    by krishnoid (1156) on Friday May 31 2019, @09:57PM (#849979)

    "Qualcomm has monopoly power over certain cell phone chips, and they use that monopoly power to charge people too much money," says Charles Duan, a patent expert at the free-market R Street Institute. "Instead of just charging more for the chips themselves, they required people to buy a patent license and overcharged for the patent license."

    Why is charging too much for patent licenses worse than charging too much for chips (presumably containing the patented technology)? Is it because charging for chips as you use them smooths out economic growth a little better?

    • (Score: 4, Insightful) by danaris on Friday May 31 2019, @10:20PM (1 child)

      by danaris (3853) on Friday May 31 2019, @10:20PM (#849988)

      Because charging too much for licenses means no one can ever emerge to compete with Qualcomm on making and selling the chips.

      Dan Aris

      • (Score: 2, Informative) by RamiK on Saturday June 01 2019, @03:11AM

        by RamiK (1813) on Saturday June 01 2019, @03:11AM (#850070)

        This is pure Apple propaganda. Plenty of Korean, Japanese and even Chinese fabless successfully emerged to compete against Qualcomm by designing and ordering their own.

        If Apple isn't willing to pay they're free to design their own like the rest of the world.

        --
        compiling...
    • (Score: 2) by JoeMerchant on Saturday June 01 2019, @03:52AM

      by JoeMerchant (3937) on Saturday June 01 2019, @03:52AM (#850080)

      It's not overcharging when there's no competition who can / will deliver for less.

      Monopoly schmonopoly, greed is good - without wealth concentration who will order new mega yachts? Who will build McMansions on the waterfront to pay mega-property taxes? Who's going to inherit enough money to build towers with their name on top? Who's going to start private space services?

      It has been trickling down since 1980, can't you feel it yet?

      --
      🌻🌻 [google.com]
  • (Score: 0) by Anonymous Coward on Saturday June 01 2019, @01:36AM (1 child)

    by Anonymous Coward on Saturday June 01 2019, @01:36AM (#850036)

    Now they can buy from Huawei..... oh wait.

    • (Score: 0) by Anonymous Coward on Saturday June 01 2019, @01:53AM

      by Anonymous Coward on Saturday June 01 2019, @01:53AM (#850045)

      Huawei buys their chips from the Koreans and the Japanese.

  • (Score: 3, Interesting) by shortscreen on Saturday June 01 2019, @03:16AM

    by shortscreen (2252) on Saturday June 01 2019, @03:16AM (#850071) Journal

    How is this not the patent system working as expected?

    If a judgment can be obtained saying that Qualcomm overcharged for its patented product, then what of big pharma?

  • (Score: 0) by Anonymous Coward on Saturday June 01 2019, @12:46PM

    by Anonymous Coward on Saturday June 01 2019, @12:46PM (#850168)

    Qualcomm got investigated for its discriminatory and protectionist pricing at the behest of poor little upstart Apple who always promotes open competition and low prices.
    It sure hasn't hurt Apple from being wildly profitable, the MOST profitable in the phone market.

  • (Score: 1) by hwertz on Sunday June 02 2019, @07:56AM

    by hwertz (8141) on Sunday June 02 2019, @07:56AM (#850487)

    To be fair though, Qualcomm did not just buy up some patents or whatever to enforce. Back in the day, they basically developed CDMA technology from scratch while others who looked into it said it was not possible; then, developed it further while others said it would not fit into a portable phone, then developed it further while other vendors conceded it would fit into a phone but determined it probably would not get reasonable battery life. (Part of this, of course, is simply that back then Moore's law was in full swing so by the end of those 4 or 5 years the same amount of processing power took about 1/8tht he power and space.) UMTS tried to avoid those patents and did not succeed (not surprising to me given it is wideband CDMA -- 5mhz instead of 1.25mhz).

    The good and the bad here are really one and the same, depending on your point of view. The good -- Qualcomm's chips really are very good, they have a lot of expertise in this market, and are still finding new ways to save power, increase sensitivity, and lower bit error rate on their cellular radios, put more and more new standards into the chips, and so on. They charge one fee for full patent access rather than nickle and diming, and have a reasonably low price on this and on chips. The bad side -- the same things.... Qualcomm's having a big head start plus top notch RF engineers means it is VERY difficult for anyone else to catch up; and, Qualcomm does try to estimate what it'd cost for a large phone vendor to roll their own line of chips and make sure it's just a bit cheaper to stick with those Qualcomm chips.

    I had a Samsung that had like a MediaTek CDMA and Samsung LTE chip. Samsung found their chip did not quite match Qualcomm's in terms of power use or RF, and also that they were spending more developing their LTE chip than it would cost to simply buy Qualcomm chips (Samsung quit making LTE chips.) MediaTek so far is still having a go at making various LTE, 5G, etc. chips; good luck to them.

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