Corporate News Blog - Qualcomm’s Fresh Lawsuit Against Apple Seeks Ban of Sale and Manufacture Of iPhones in China

LONDON, UK / ACCESSWIRE / October 17, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for QUALCOMM Inc. (NASDAQ: QCOM), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=QCOM. The Company has reportedly filed a fresh lawsuit against Apple Inc. (NASDAQ: AAPL) in a Beijing, China's intellectual property court for patent infringement. Qualcomm is seeking the Chinese Court's help in banning the sale and manufacture of Apple's iPhones in China. The news of the latest lawsuit was reported by Bloomberg on October 13, 2017. The lawsuit was filed by Qualcomm on September 29, 2017. However, the Beijing Court has not made these filings public yet. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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According to Qualcomm spokesperson Christine Trimble, the lawsuit filed by Qualcomm claims that Apple has violated three of its patents. These three patents are not essential to any industry standards; hence Qualcomm is not obliged to licence them. The patents are with regards to power management and touch screen technology known as Force Touch, which Apple have incorporated for use in its iPhones. According to Christine Trimble:

"Apple employs technologies invented by Qualcomm without paying for them."

Countering Qualcomm's claims, Apple has dismissed the matter saying that the claims have no standing. Josh Rosenstock, an Apple's spokesman, said:

"In our many years of ongoing negotiations with Qualcomm, these patents have never been discussed. Like their other courtroom maneuvers, we believe this latest legal effort will fail."

Probable Impact of the lawsuit on Apple

This is the latest legal salvo by Qualcomm against Apple in the contentious legal battle between the two tech giants. According to Bloomberg, Qualcomm's intention is to hit Apple where it hurts most. China is a very important market for Apple in terms of sales and The Greater China region contributes approximately 22.5% of the Company's global annual sales of $215.6 billion in FY16.

According to experts in the industry, there have been no past precedents till date which suggest that the Chinese Courts would take any action in the matter at the behest of a US Company. However, for the Chinese authorities, the matter has both pros and cons. On one hand they would be concerned with the fact that any disruptions in the manufacturing of iPhones in China would have an immediate impact on the employment situation at Apple's supplier companies and major employers in China like the Hon Hai Precision Industry Co. On the other hand, the regulators would welcome the move as the decision would support Chinese phone manufacturing companies like Guangdong Oppo Electronics Co. to get a better market advantage against Apple.

Apple's investors are confident that the Company would not risk any disruption in its manufacturing and if the threat becomes imminent, Apple always has the option of making any payments to Qualcomm in the short-term till the matter is completely sorted out. Apple has a lot riding at present given the recent launch of Apple's iPhone 8 and X models. However, these models already have huge competition from existing Chinese's phone models. Apple's suppliers and manufacturers are in a hyper mode to meet demands of the coming festive season and any glitch in the iPhone supply would be hugely detrimental.

History of Legal Tussle between Qualcomm and Apple

The Qualcomm/Apple legal battle started off in January 2017, when Apple filed a lawsuit against Qualcomm claiming that it had withheld payments of nearly $1 billion. Qualcomm had withheld payments in retaliation for Apple's cooperation with South Korean's regulators in an investigation against the former.

Qualcomm is the world's biggest provider of mobile chips and its patented technology allows them to connect to cellular data networks. Qualcomm's major revenue comes from royalties for allowing Companies to use its licensed technology. The Company's fees are calculated based on the value of phone and not the chips. Which is the major point of contention between Qualcomm and Apple. Apple's stance is that it should pay a fee based only on the value of Qualcomm's connectivity chips, not the entire device. Apple has always paid its licensing fees to Qualcomm. But Apple is against Qualcomm charging a percentage of the price of the device using its technology as a licensing fee. Qualcomm has come under the scrutiny of regulators in many countries like South Korea and US for the same issue.

In April 2017, Apple asked its suppliers and contract manufacturers to stop paying royalties for using Qualcomm's licensed technologies. This prompted Qualcomm to file a lawsuit against these Apple's suppliers and contract manufacturers in May 2017 for non-payment of royalties and breach of licence agreements. In July 2017, Qualcomm appealed to the US International Trade Commission to ban the import of certain iPhones that do not use Qualcomm's chips. Qualcomm's complaint alleges that Apple's iPhones infringe on six Qualcomm's mobile patents.

In a recent update, on October 11, 2017, the Taiwan Fair Trade Commission (TFTC) fined Qualcomm a record $773 million for violation of Taiwanese competition law. The Company has sought a stay in the matter and would be appealing TFTC's decision.

The legal battle has already impacted earnings and financial performance of Qualcomm in FY17. According to an estimate by an industry expert, Qualcomm has lost about $2 billion in annual revenue because of this legal battle.

Last Close Stock Review

On Monday, October 16, 2017, the stock closed the trading session at $52.38, marginally down 0.83% from its previous closing price of $52.82. A total volume of 5.92 million shares have exchanged hands. QUALCOMM's stock price advanced 0.36% in the last one month. The stock is trading at a PE ratio of 20.05 and has a dividend yield of 4.35%. The stock currently has a market cap of $77.58 billion.

Apple's share price finished yesterday's trading session at $159.88, advancing 1.84%. A total volume of 24.08 million shares have exchanged hands. The Company's stock price soared 6.53% in the last three months, 13.23% in the past six months, and 35.92% in the previous twelve months. Additionally, the stock skyrocketed 38.04% since the start of the year. Shares of the Company have a PE ratio of 18.19 and have a dividend yield of 1.58%. The stock currently has a market cap of $830.59 billion.

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