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Thread: Qualcomm Said to Seek U.S. Import Ban for iPhones

  1. #1
    Admin Daniel Nenni's Avatar
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    Qualcomm Said to Seek U.S. Import Ban for iPhones

    Wow, how do you mend a relationship after this? Big win for Intel?

    Incensed over Apple Inc.’s decision to stop paying it billions of dollars in licensing fees for smartphone chips, Qualcomm Inc. plans to retaliate by asking a U.S. trade agency to ban the imports of iPhones, according to a person familiar with the company’s strategy....

    Qualcomm Said to Seek U.S. Import Ban for iPhones - Bloomberg

    “We strongly believe we’re in the right. And I’m sure they believe that they are,” Cook said of the dispute with Qualcomm. “And that’s what courts are for. And so we’ll let it go with that.”

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    Last edited by Daniel Nenni; 05-03-2017 at 03:26 PM.
    Now available in print or Kindle: "Mobile Unleashed: The Origin and Evolution of ARM Processors In Our Devices"

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    Big win for Intel? Naw. Would hardly move their needle, even in the unlikely event that they were to snag 100% of Apple's business. No one else of stature has a market for discrete modems.
    It's a big loss for the iSheep, who can count on more trailing edge modems for top dollar, if Apple and QCT stop doing business with each other. Doubtful it will get to that.

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    Admin Daniel Nenni's Avatar
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    Quote Originally Posted by JeffreyHF View Post
    Big win for Intel? Naw. Would hardly move their needle, even in the unlikely event that they were to snag 100% of Apple's business. No one else of stature has a market for discrete modems. It's a big loss for the iSheep, who can count on more trailing edge modems for top dollar, if Apple and QCT stop doing business with each other. Doubtful it will get to that.
    Anybody remember the SanDisk Sansa? How about the iPod? Exactly.....

    Per Wikipedia:

    iSheep
    The term was introduced in May 2006 when SanDisk launched the "iDont" campaign to advertise the SanDisk Sansa.[2] iDon't calls on "free thinkers" to "break-free from restrictive formats and a single source for music," with slogans such as "You do not need to follow." The Campaign's site offered T-shirts, posters, and stickers featuring a monkey and asking, "Are you an iChimp?" Another image showed a sheep and says, "iSheep say Baah." while another showed a donkey trying to bite a carrot dangling in front of its face with the slogan "iFollow."[3][4][5] The iSheep campaign was abandoned in July 2006, to give way to the "Lil'Monsta" mascot campaign.[6]

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    Expert hist78's Avatar
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    In the long run, both Qualcomm and Intel will suffer. Apple and other big players such as Google, Facebook, Amazon, and Microsoft don't like to be locked down by any vendors. They will adopt more in-house developed solutions and ask foundries to manufacture them.

    In terms of market capitalization and size of revenue, these companies are bigger or much bigger than Qualcomm or Intel. They can afford to do it and they need to do it to differentiate themselves from other competitors.

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    Admin Daniel Nenni's Avatar
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    Quote Originally Posted by hist78 View Post
    In the long run, both Qualcomm and Intel will suffer. Apple and other big players such as Google, Facebook, Amazon, and Microsoft don't like to be locked down by any vendors. They will adopt more in-house developed solutions and ask foundries to manufacture them.

    In terms of market capitalization and size of revenue, these companies are bigger or much bigger than Qualcomm or Intel. They can afford to do it and they need to do it to differentiate themselves from other competitors.
    Yes we call them fabless systems companies and they will give fabless chip companies a run for their margins.

    It really is a joke to think QCOM will beat Apple on this. $1B is nothing to Apple but to QCOM it is a big deal and cost them a big stock drop on an earnings warning. My bet is that QCOM bends over to Apple's demands (lowered licensing fees is better than no licensing fees), absolutely.

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    I'll take the other side of that bet. Nokia tried the same thing, when they were full of hubris and King of The Hill. They argued QTL's agreed terms were unFRANDly, and refused to renew their license on the previous terms. Instead, they sued in Delaware, seeking a judicial determination of FRAND. During the pendency of that case, Nokia gratuitously tendered $20 million a Quarter, representing their view of appropriate royalties. QTL refused those nominal tenders. Nokia folded as the trial was to begin, paying billions and a fair royalty rate.
    At least Nokia had valuable SEP and commercially important patents to cross-license. Apple has nothing but mass and bloated cash. This is as much about the competition to Apple that QTL enables, as it is about money. iPhone sales in China are in steady decline, because Huawei, Oppo, Vivo, Xiaomi, and other QTL-enabled locals offer more advanced technology for far less money. It is such competition that will be Apple's undoing. 2/3 of their profits come from iPhones. Without QTL's IP, that segment would not exist. No device manufacturer should be able to bully the supply chain and others into exacting 91% of the industry's profits. Apple will not succeed in rewriting 30 years of accepted FRAND contracts in an industry it entered on the backs of others, 10 years ago. Pigs get slaughtered.

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    Last edited by JeffreyHF; 05-04-2017 at 08:43 AM.
     

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    I'd say "yes but..."
    I think it's obvious to anyone with a brain that Apple would like to control every strategic technology that goes into their devices, from the CPU to the GPU/throughout engine to the wireless. They've made the first tentative steps down that path with the W1 (of course, being a first product, that deals with the smallest part of the problem space).

    SO: given this fact, how do you best cope? As far as I can tell the two strategies have been

    - QC has (presumable after negotiations with Apple) UTTERLY REFUSED anything that looks even slightly like a technology transfer.

    - Intel (I am guessing) has agreed that after some period of mutual learning, they'll sell Apple something --- maybe at first cells, later IP that Apple can modify as it wishes? --- that will get Apple to the point of strategic control.

    So yeah, Intel doesn't get to sell razor blades forever. But they get to sell SOMETHING. Whereas QC, I think, insisted on poking the bear by (I am guessing) not just refusing to help Apple down this path but blustering stupid threats along the lines of "You think you can make a modem without us? Let me tell you something, NOBODY can make a modem without us."


    This arguing about payments is just foreplay. Let's see what happens when Apple countersues and starts bringing things up in court. I'm guessing that, from a FRAND and monopoly point of view, QC ain't gonna look so good as far as those threats go. And while the US right now might be happy to ignore a monopolist boasting about exploiting its monopoly powers, my guess is Europe and China (and, hell, Korea and Japan) will be happy to use whatever the US discovery process turns up.

    Remember "Knife the baby"?
    Microsoft Asked Apple to `Knife the Baby,' Court Told - SFGate
    Trials can be a great way to let the world know things a monopolist would rather not be well-known.

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    In the foundry model, TSMC or Samsung make Apple and QTI chips, Apple and QTI compete, and the model thrives on competition. So from one standpoint, this is a nothing-to-see-here case. Just typical competition as usual.
    But the element of a customer changing the rules of engagement on a vendor should be troubling to the fabless industry. It certainly shows how difficult it is to profit from intellectual property in the fabless model. If IP cannot be protected, capital will flee, in the long run. Innovation will be reduced--Fewer startups and less capital for those startups. I'm not saying that the IDM model or vertical integrated models are better. They each have their flaws and the fabless model is probably better. I'm just saying Apple has found the foundry model's flaw, and is exploiting it.
    So, a new model, one which can resist capture by a powerful customer, is likely to emerge. It will be interesting to watch for signs of this.

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    That's an interesting piece of fantasy. Patents are by definition a legal monopoly involving the subject inventions. Only SEPs carry FRAND obligations. The SSO's don't define FRAND. Industry norms and practices, evidenced by arms length bilateral negotiations between sophisticated corporations, relying upon their own engineering and legal counsel, do.
    In the mobile device industry, QTL has 30 years of those commercial dealings to evidence business custom and usage. Nokia, Ericsson, Samsung, Siemens, InterDigital, and all the other significant SEP holders have always done things the same way. It was the industry as a whole, not QTL, who decided that consolidating royalties at the device level, was the most efficient and fair way to pass that cost on to consumers, and avoid multi-level agreements, and incessant litigation.
    Now comes Apple 10 years ago, new to the mobile device business, but the most successful in marketing those products utilizing the technology of others. They amassed $250 billion in cash, and built 2/3 of their business, on the smartphone, extracting 91% of all profits in the entire supply chain, in the process.
    But that's not enough for them. They want to add another couple of points to their margins, and slow the technological trajectory, to extend their ability to overcharge consumers. They don't like the competition QTL and QCT enable. Just look at their declining appeal in China. That's the canary in the coal mine.
    Not too long ago, the EU considered inserting itself in the global royalty debate, but after years of investigation, Nellie Kroes declined to file a Statement Of Objections against Qualcomm, finding no regulatory basis to do so. Fast forward to a couple of years ago, the NDRC in China, using an outlier and parochial view of competition, imposed a lower local SEP-only royalty for domestic sales. Even that lawless kleptocracy declined to impose modem-level royalties on QTL. Then corrupt Korean regulators, bribed by Samsung to the point of the eventual resignation and prosecution of their president, decided to hand Samsung and Apple a first of its kind ruling. That's on appeal, and will be for years to come. Apple then went to the FTC, and in a 2 to 1 decision right before Trump's inauguration, with the now acting commissioner vehemently dissenting, bought into Apple's self-serving theory, and filed a complaint against QTL. That complaint gave Apple the cover to attack 30 years of custom and usage, and try to blow up the status quo. That FTC action will fail, and Apple's will, as well.
    Only 10% of QTL's SEPs are practiced at the modem level. How can modem-level royalty pricing account for the other 90%? And what about the thousands of commercially important, non-SEP patents that are currently offered in the same basket to device manufacturers? They carry no FRAND licensing requirements, and if separated from the basket, will require additional license, to avoid litigation and ITC exclusion risks.
    It is hubris and greed on the part of Apple, that has created this mess. And by pressuring the long licensed contract manufacturers to hold back royalties owed under those long standing agreements, it is Apple who has poked the nose of the bear. It will not end well for them. Nokia was once in their position, and might as well be back to manufacturing rubber boots again, after also overplaying their hand.

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    Admin Daniel Nenni's Avatar
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    Speaking of Nokia:

    Nokia Sues Apple to Escalate Mobile-Patent Licensing Battle - Bloomberg
    • Finnish company accused by Apple of ‘patent troll’ tactics
    • Apple suit says Nokia conspired to ‘extort exorbitant revenue’


    We have now officially ended the semiconductor M&A cycle and are now in the IP legal action phase...

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