Qualcomm’s Unfair Practices Forced Intel To Sell Its Modem Chip Business To Apple At ‘Multi Billion Dollar’ Loss, Claim Intel Employees

Qualcomm’s business tactics and practices forced Intel to sell its modem chip business to Apple Inc., claimed Intel employees in a court filing. The recently conducted sale of Intel’s Mobile Modem business to Apple took place at a rather astronomically discounted price of just $1 Billion. It is interesting to note that Intel doesn’t hold Apple responsible for the heavily discounted sale price, which granted the iPhone maker access and ownership of several patents, competent engineers, hardware and R&D that Intel had clearly worked hard to develop.

Intel Corp, through a court filing on Friday, claimed Qualcomm forced the company out of the market. Intel was directly referring to the smartphone modem business that the company sold to Apple Inc. earlier this year. Needless to add, the sale price of $1 Billion must have caused a great deal of loss to Intel. In fact, Intel officially claimed that it sold its smartphone modem chip business to Apple Inc. at “a multi-billion-dollar loss.” It is important to note that at the time of sale, Apple Inc. was Intel’s sole and largest customer for smartphone modem chips. Moreover, Apple had been actively developing alternatives not only with Qualcomm but also with Taiwan’s TSMC.

Qualcomm’s Patent Licensing Practices “Strangled Competition,” Forcing Intel To Sell To Apple?

Back in May this year, U.S. District Judge Lucy Koh in San Jose noted that Qualcomm’s patent licensing practices “strangled competition” in parts of the market for modem chips that connect smartphones to mobile data networks. The judge even ordered Qualcomm to renegotiate licensing agreements at reasonable prices. As expected, Qualcomm appealed and won a temporary suspension in enforcement while the appeal is considered and debated.

During the time, Intel had been quite busy developing smartphone modem chips. Apple Inc. was Intel’s biggest and most significant modem customer. When Apple settled an expensive lawsuit with Qualcomm, it meant Intel’s mobile modem business never truly had nor it would have had an assured large and long-term customer. Essentially, Intel was competing with Qualcomm just to satisfy its sole customer. When Apple retained its agreement with Qualcomm, Intel had virtually no option but to sell. In July, Apple bought the Intel unit in a deal valued at $1 billion.

In the official court filing, Intel said it was forced out of the market because of Qualcomm’s patent licensing practices, and supported the FTC’s case against Qualcomm. Steven R. Rodgers, Intel’s general counsel, composed a blog post, which read,

“We invested billions, hired thousands, acquired two companies and built innovative world-class products that eventually made their way into Apple’s industry-leading iPhones, including the most recently released iPhone 11. But when all was said and done, Intel could not overcome the artificial and insurmountable barriers to fair competition created by Qualcomm’s scheme and was forced to exit the market this year.”

Qualcomm Fights To Overturn A Sweeping Antitrust Decision:

Intel is getting an opportunity to speak up about the seemingly discounted price of just a billion dollars for an entire division that’s highly critical for smartphones. The company is getting this opportunity because Qualcomm lost a very important lawsuit that was leveled against it by the U.S. Federal Trade Commission. Qualcomm is seeking to overturn a sweeping antitrust decision, and Intel is being allowed to speak up. As expected, Intel executives who testified at the trial, argued on Friday that the ruling should stand. The appeal proceedings are expected to commence early next year.

The US joined China, the European Union, and South Korea in ruling that Qualcomm violated laws in how it licenses smartphone chips. Qualcomm is the largest maker of modem chips. The chips are critical for any modern-day smartphone or even laptop to remain connected to wireless networks.


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