Apple Stops Paying iPhone Royalties, Escalating Feud With Qualcomm

Southern Dad

Former Staff
Feb 2015
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Shady Dale, Georgia
This dispute just got very expensive. How could it effect future iPhones and iPads?

Apple Stops Paying iPhone Royalties, Escalating Feud With Qualcomm

Apple has stopped paying its iPhone manufacturers for royalties owed to Qualcomm for the first quarter, Qualcomm said on Friday. Apple sued Qualcomm in January, saying that the royalties were excessive, and will now be withholding payments until the legal battle is resolved.

The escalation forced Qualcomm to slash its financial forecast for its current quarter to account for the loss of about $500 million of lucrative royalty revenue. Qualcomm developed and owns the rights to many cellular and mobile phone communications technologies and its royalty division brings in 80% of its pre-tax profit. On the iPhone, Qualcomm's licensing agreements are with Apple's manufacturers directly, who in turn charge Apple.

Qualcomm's revenue in the second quarter will total $4.8 billion to $5.6 billion, $500 million less than the company forecast almost two weeks ago, when it reported results for the first quarter and said it wasn't sure if Apple would continue paying royalties, which also cover iPads with mobile chips. Adjusted earnings per share will be 75 cents to 85 cents, down from the earlier forecast of 90 cents to $1.15 (Qualcomm starts its fiscal year at the end of September, so the revised forecast covers the company's third fiscal quarter of 2017).

Apple Stopped Paying Royalties Owed to Qualcomm for iPhones | Fortune.com