Apple Contractors Gang Up On Qualcomm, File Antitrust Complaint

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Apple Contractors Gang Up On Qualcomm, File Antitrust Complaint

A group of leading smartphone manufacturers joined Apple Inc.in a legal battle against Qualcomm Inc., claiming that the chip maker charges excessive patent licenses and violates antitrust laws.

Net income attributable to the company fell to $866 million, or 58 cents per share, in the third quarter ended June 25 from $1.44 billion, or 97 cents per share, a year earlier.

During the third quarter of fiscal 2017, Qualcomm returned $1.1 billion to stockholders, including $844 million, or $0.57 per share, of cash dividends paid and $300 million through repurchases of 5.2 million shares of common stock. Meanwhile, the Federal Trade Commission sued Qualcomm as well, based in part on a complaint from Apple, alleging that the chipmaker's patent contracts unfairly discouraged customers from using chips from competitors.

The four companies in the suit - Foxconn parent company Hon Hai Precision Industry and component manufacturers Wistron Corp, Compal Electronics and Pegatron Corp - filed a complaint Tuesday accusing Qualcomm of violating USA antitrust law.

The suppliers became involved in the legal battle when Qualcomm filed separate lawsuits against them for payments that it believes Apple owes the chip maker. The stock price has fallen roughly 9.7% through Wednesday's close since Apple filed its initial suit in January against Qualcomm.

"We expect these licensees will continue to take such actions in the future until the respective disputes are resolved", it added.

Accusations say that the company's high influence is often used to "bully" other companies.

In April, Apple stopped paying royalties to contract manufacturers for phone patents owned by Qualcomm over an "unresolved issue".

As much as Apple Inc.'s iPhone has boosted Qualcomm Inc.'s fortunes for years, it's now coming back to bite the mobile chip making giant.

Apple has refused to pay royalties to Qualcomm on certain technologies.

Qualcomm is also embroiled in an antitrust case with the European Union, in which it is accused of anticompetitive behaviour against British firm Icera where, once again, the case surrounds the licensing model for its chips.

However, this policy of Qualcomm did not go down well with the Tim Cook-run company, which termed these fees being charged by the chip maker as unjust.

Despite remaining hopeful that they can reach a settlement, Qualcomm execs also said that they have made "several offers" with Apple to sit down with a third party and hammer out the matter, each of which were turned down.

Apple, on the other hand, claimed that Qualcomm charges a percent of the total price of a completed device as a fee for its technologies.

"If Apple hadn't interfered with the licenses and instructed the contract manufacturers to take these actions the contract manufacturers would not be contesting the licenses now", Aberle said.

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