Brief

Apple and Qualcomm fight escalates over intellectual property, pricing

Dive Brief:

  • Contention is brewing between Qualcomm and Apple, with Apple accusing Qualcomm of charging excessive licensing fees, while Qualcomm claims Apple's successful iPhone business is due to Qualcomm technology and that Apple has attempted to acquire their technology more cheaply, The Wall Street Journal reported.
  • Finances have also come into play, with Qualcomm claiming that Apple and other affiliates which assemble Apple’s products are withholding licensing payments to Qualcomm. Apple itself insists that Qualcomm has retained nearly $1 billion in rebates due.
  • Qualcomm's shares have dropped 19% thus far in 2017.

Dive Insight:

Qualcomm is not the only supplier with which Apple is battling. Earlier this month, the ubiquitous technology innovator announced plans to develop its own graphics chips, leaving former supplier Imagination Technologies in the cold.

The two scenarios bear some similarity, however. Both involve the tech superstar's plans to more cheaply produce components similar to those it had previously sourced elsewhere. And, both situations potentially involve patent infringement, with suppliers claiming rights to specific technologies without which Apple cannot produce its products.

However, troubling as the pending lawsuits are, both Qualcomm and Imagination must be aware of the ever-present threat of working with a company which thrives on innovation. Further, suppliers should be wary of overdependence on a single buyer and, if possible, position themselves to quickly transition to other buyers when necessary. The value of highly competent procurement officers has never been more critical.

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Filed Under: Communications