Qualcomm has made its most dramatic legal move yet in its long-running battle against Apple, by seeking to halt manufacturing of the iPhone in China.
The mobile chipmaker has accused Apple of patent infringement in a Beijing court. It is seeking an injunction that would halt both sales and manufacture of iPhones in China, where the vast majority of the devices are produced.
The move means that Qualcomm is now seeking iPhone sales or import bans in the US, Germany and China, which together make up many of Apple’s largest markets.
Qualcomm confirmed the legal action, which was first reported by Bloomberg, but did not provide further comment. Apple did not immediately have a comment. The legal filing was originally made at the end of September.
Apple’s shares were little changed by the news by lunchtime in New York, trading 0.5 per cent higher at $156.86. Qualcomm too was flat at $52.97.
Apple said in response that Qualcomm’s claim is meritless.
“Apple believes deeply in the value of innovation, and we have always been willing to pay fair and reasonable rates for patents we use. In our many years of ongoing negotiations with Qualcomm, these patents have never been discussed and in fact were only granted in the last few months. Regulators around the world have found Qualcomm guilty of abusing their position for years. This claim is meritless and, like their other courtroom maneuvers, we believe this latest legal effort will fail.
Apple and Qualcomm are embroiled in a wide-ranging legal battle around the world, chiefly over pricing and patents. In January, Apple accused Qualcomm of overcharging for intellectual property related to cellular wireless technologies. In July, four of Apple’s largest suppliers in Asia joined its legal battle against Qualcomm, alleging anti-competitive behaviour and breaches of contract.
Qualcomm has sued the same four suppliers for refusing to pay royalties, at Apple’s request. The San Diego-based chipmaker has accused Apple of using its “enormous market power to coerce unfair and unreasonable licence terms”, as well as patent infringement. It denies overcharging for the 3G and 4G technology that it claims provides an essential foundation for every smartphone.
As the dispute escalates, Qualcomm is facing a squeeze to its profits as Apple halts royalty payments. It is also fighting regulatory battles around the world. On Wednesday, it was hit by a record $774m fine by regulators in Taiwan. The Taiwanese Fair Trade Commission accused Qualcomm of abusing its dominant position over certain key mobile phone chips by refusing to provide products to clients that do not agree with its conditions. Qualcomm has said it will appeal.
The latest step in its Apple fight is not Qualcomm’s first legal tangle in China.
In 2015, China’s National Development and Reform Commission found that Qualcomm violated its anti-monopoly law, fining it $975m and forcing the chipmaker to make changes to how it does business in the region. The resolution of that investigation unlocked a new wave of licensing agreements for Qualcomm in China.