Apple parts firms sued

Qualcomm has filed a complaint against Foxconn Technology and three other Apple contract manufacturers for not paying royalties, firing the latest salvo in its fight with the iPhone maker.

The other manufacturers listed by Qualcomm were Pegatron, Wistron and Compal Electronics.

Apple sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1bn (€906m) in promised rebates.

Qualcomm said in the complaint Apple is trying to force the company to agree to an “unreasonable demand for a below-market direct license”.

Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court.

“While not disputing their contractual obligations to pay for the use of Qualcomm’s inventions, the manufacturers say they must follow Apple’s instructions not to pay,” Qualcomm said in a statement.

Apple has agreed to indemnify the manufacturers for any damages resulting from breaching their agreements with Qualcomm, the chipmaker said in the complaint filed in the US District Court for the Southern District of California.

Qualcomm said it sought an order that would require the manufacturers to comply with their long-standing contractual obligations to the company, as well as declaratory relief and damages.

The chipmaker slashed its current-quarter profit and revenue forecasts in April, saying it excluded revenue receivable from the four contract manufacturers.

Qualcomm, the largest maker of chips used in smartphones, is a major supplier to Apple and Samsung Electronics for modem chips that connect phones to wireless networks.

Foxconn is the trading name of Taiwan’s Hon Hai Precision Industry, the main assembler of Apple devices.

Shares in Qualcomm have fallen 14% since the start of the year. However, they are up by 10% from this time a year ago. Apple shares have risen by almost a third this year and have climbed 66% since a year ago. n Reuters


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