If Qualcomm loses its appeal, smartphone makers might be able to pay the company less for its technology, though it’s unclear whether that will translate into lower prices for consumers.
The WIRED Guide to 5GQualcomm has historically charged a fee both for the chips it sells to device makers like Apple and Samsung, and a patent licensing fee of around 5 percent of the total value of a device, up to about $20. That means if you paid $300 for a phone, Qualcomm would get $15 on top of whatever the manufacturer paid for any Qualcomm chips included in the phone. If you paid $1,000, Qualcomm would get $20.In the FTC case, Apple argued that this license overvalued Qualcomm's chips relative to other technologies, such as touchscreens, that go into a smartphone. But Apple and other customers say they were unable to renegotiate patent licensing prices because Qualcomm threatened to cut off supplies of chips. Koh's order specifically bans Qualcomm from cutting off chip supplies, but it doesn’t necessarily stop Qualcomm from charging patent licensing fees separate from the cost of chips.
Qualcomm argued that it underpriced the chips themselves because it didn't account for the value of its intellectual property when selling the chips. It also claimed that the average price of smartphones dropped by 34 percent between 2010 and 2017 and argued that the drop is evidence that it hasn’t harmed competition.Qualcomm has been competing with companies like Intel and Taiwanese chipmaker MediaTek in the modem chip business. Last month Intel abandoned its plans to make chips capable of connecting to 5G networks, leaving smartphone makers more dependent on Qualcomm than ever.
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