Qualcomm accuses tech group of ‘misdirecting’ trade regulators

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(Reuters) – Qualcomm Inc fired back in its case against Apple Inc on Monday, accusing its critics of waging a “coordinated effort aimed at misdirecting” trade regulators.

Earlier this month, Qualcomm filed a complaint with the U.S. International Trade Commission seeking to ban iPhones that use chips “other than those supplied by Qualcomm affiliates.” Apple began using Intel chips in the iPhone 7.

Last week, a lobbying group that represents Alphabet Inc’s Google, Amazon.com Inc, Microsoft Corp and Facebook Inc argued that barring Apple from importing foreign-assembled iPhones that use Intel Corp chips would cause “significant shocks to supply” for phones and would hurt consumers.

Intel and Apple rival Samsung Electronics Co Ltd are also members of the group, called the Computer & Communications Industry Association. Apple is not a member of the group.

Qualcomm supplies so-called modem chips to Apple, which help iPhones and iPads connect to cellular data networks. The two have been locked in a sprawling legal battle in which Apple has objected to Qualcomm’s business model of requiring customers to sign patent license agreements before buying chips.

In turn, Qualcomm has accused Apple of directing its contract manufacturers like Foxconn to withhold license payments in a bid to hurt Qualcomm. The conflict has taken a toll on Qualcomm’s profit outlook.

In its filing on Monday, Qualcomm argued that its import ban is not actually about Intel’s chips, but instead concerns the patented technology that surrounds the Intel chips in current versions of the iPhone. Thus a ban on importing the phones would not hurt competition in the long term, Qualcomm argued. “Apple can purchase and utilize any LTE modem it chooses so long as it does not infringe Qualcomm’s asserted patents,” the company wrote.

Qualcomm also said many other companies – including MediaTek Inc, Samsung, Marvell Technology Group, Leadcore, Spreadtrum, and HiSilicon – also make modem chips and could supply the smartphone industry.

Asked for comment, Apple reiterated its previous stance on Qualcomm’s business model, saying that Qualcomm supplies Apple “with a single connectivity component, but for years have been demanding a percentage of the total cost of our products – effectively taxing Apple’s innovation.”

Reporting by Stephen Nellis in San Francisco; Editing by Matthew Lewis