Apple Inc (NASDAQ:AAPL) is still using wireless technology from Qualcomm Inc. (NASDAQ:QCOM) in its iPhones.
Apple honored royalties due to Qualcomm
Qualcomm is still enjoying royalties despite lawsuits between the two companies last year which had Qualcomm investors fearing that the payments were entirely coming to an end. Qualcomm confirmed on Wednesday that contract manufactures from Apple such as Foxconn honored their royalties. However, they withheld about $1 billion from the total undisclosed amount due.
The withheld amount is equal to the amount Qualcomm withheld last year from Apple in another agreement that has already expired, to cooperate on mobile technology.
Mobile industry legal suits
These partial royalty payments as well as future uncertainty comes amid legal disputes in the mobile market over intellectual property rights have reignited after several years of quiet. About six year ago, Apple had filed a lawsuit against Android phones manufacturers for infringing patent rights.
Apple sued Qualcomm in January claiming that the mobile chip designer charged royalties that were too high on the use of its technology. It alleged that Qualcomm owed the company a total of $1 billion in rebates.
Qualcomm, last week, counter-sued Apple claiming that the company had violated the agreement they had signed. Steve Mollenkopf the CEO of Qualcomm stated during a call, “We have successfully navigated challenges like this in the past and we have confidence in the sustainability of our licensing business.” He also added that the company understands that these periods could lead to increased volatility in the future results and need open as well as regular dialogue with their investors.
How Qualcomm charges for its royalties
The lawsuit by Apple and the other regulatory probes throughout the world have spooked investors through challenging the company’s royalty business model. Qualcomm charges phone manufacturers a percentage of the cost of every phone regardless of whether the phone had chips from the company or its rivals such as Intel.
Apple is likely to continue paying for a portion of what they owe in the future. Patrick Moorhead the president of Moor Insights & Strategy stated that the $1billion cooperation agreement expired in 2016 , hence Qualcomm should prepare for smaller payments in the coming quarter.
On Wednesday, Apple stock closed in at $140.68 after a fall of $0.52 0r 0.37% while Qualcomm stock closed at $52.61 after a fall $0.06 or 0.11%.Apple Inc (NASDAQ:AAPL) Paid Royalty Fees To Qualcomm Inc. (NASDAQ:QCOM) Despite Legal Suits Between The
