Qualcomm files complaint against Apple contract manufacturers

A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, U.S.

Qualcomm Inc. filed a complaint against Foxconn Technology Group and three other Apple Inc. 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 Corp., Wistron Corp. and Compal Electronics Inc.

Apple sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Qualcomm said in the complaint that Apple is trying to force the company to agree to a “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 on Wednesday.

The logo of Foxconn, the trading name of Hon Hai Precision Industry, is seen on top of the company’s headquarters in New Taipei City, Taiwan.

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 United States 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 did not disclose the quantum of royalty owed to it by the manufacturers.

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

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

Qualcomm’s shares were marginally lower at $55.66 in premarket trading.

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