In the legal game of chicken seemingly being played by Apple and Qualcomm, it’s starting to look like Apple may hold the ultimate trump card. In the wake of Qualcomm trying to prevent Apple from manufacturing iPhones in China — which is more comical than worrisome — The Wall Street Journal is reporting that Apple is now seriously considering dropping Qualcomm as a supply partner, a move which would prompt Apple to source its modem chips for the iPhone and iPad from Intel and perhaps MediaTek.
While tech behemoths embroiled in legal battles can usually put their differences aside in the interest of profits — as Apple and Samsung continue to do — the dispute over iPhone royalty payments between Apple and Qualcomm continues to escalate wildly with each passing month. To that point, the Journal relays that the impetus for Apple’s potential decision to embrace Intel allegedly stems from Qualcomm holding back crucial software necessary to test LTE chips on upcoming iOS devices.
“Qualcomm, which has worked with Apple for a decade,” the report notes, “stopped sharing the software after Apple filed a federal lawsuit in January accusing Qualcomm of using its market dominance unfairly to block competitors and to charge exorbitant patent royalties…”
Firing back, a Qualcomm spokesperson told the Journal that its “modem that could be used in the next generation iPhone has already been fully tested and released to Apple.”
We basically have a he said, she said game going on here, and without knowing for certain where the truth lies, I find it hard to believe that Qualcomm would effectively force Apple to jump into bed with Intel. While suing Apple in jurisdictions across the globe is nothing short of a headache for Apple, the underlying strategy there is to force Apple to come to the negotiating table. In stark contrast, willfully withholding critical testing software literally leaves Apple with no choice but to say goodbye to Qualcomm forever, an outcome Qualcomm would like to avoid at all costs.
It’s also worth noting that Apple likes to source components from multiple suppliers whenever it can, a strategy designed to play companies against one another, and in the process, keep prices down while ensuring a plentiful supply of important components. In other words, Apple doesn’t need any external motivation to deepen its relationship with Intel. Indeed, Apple began using Intel LTE modems on last year’s iPhone 7 lineup.
Looking ahead, it’ll be interesting to see how the ongoing Apple-Qualcomm saga unfolds. From the looks of it, neither company appears ready to concede even an inch, which may ultimately result in yet another blockbuster legal battle down the line. Apple has eliminated companies from its supply chain before and, to put it mildly, things never work out well for those companies. Qualcomm certainly has other clients, but losing any business from Apple would obviously have huge implications.
