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Apple Is Designing iPhones, iPads That Would Drop Qualcomm Components (wsj.com)

Posted by BeauHD on from the cold-shoulder dept.

An anonymous reader quotes a report from The Wall Street Journal (Warning: source may be paywalled; alternative source): Apple, locked in an intensifying legal fight with Qualcomm, is designing iPhones and iPads for next year that would jettison the chipmaker's components, according to people familiar with the matter. Apple is considering building the devices only with modem chips from Intel and possibly MediaTek because San Diego, Calif.-based Qualcomm has withheld software critical to testing its chips in iPhone and iPad prototypes, according to one of the people. Apple's planned move for next year involve the modem chips that handle communications between wireless devices and cellular networks. Qualcomm is by far the biggest supplier of such chips for the current wireless standard. The Apple plans indicate the battle with Qualcomm could spill beyond the courtroom feud over patents into another important Qualcomm business where it has the potential to send ripples through the smartphone supply chain.

27 of 131 comments (clear)

  1. Supply-side problems... by mandark1967 · · Score: 3, Insightful

    cause company to consider alternatives...

    whoodathunkit?

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  2. Qualcomm deserve to die by Anonymous Coward · · Score: 3, Insightful

    Apple will not make any business with Qualcomm, will fund or buy better product elsewhere, and will render Qualcomm useless for everyone else.

    THIS is what you deserve when you abuse your supplier position asking too much royalties and suing your client to piss them off.

    Qualcomm will go bankrupt because they disrespected apple (one of their biggest client) for way too long!

    1. Re:Qualcomm deserve to die by Luthair · · Score: 5, Insightful

      There is a reason Qualcomm is in the position they are - they did a lot of R&D and pushed cellular forward. On the other hand Apple has done what, "invent" round corners?

    2. Re:Qualcomm deserve to die by Anonymous Coward · · Score: 2, Informative

      Apple is getting some of its own medicine, really, and Apple doesn't like it. To be honest, Qualcomm will be fine supplying its chips to other manufacturers, resulting in lots of different phones having faster network support than the iPhone of the year. Not a big deal for Qualcomm.

      Apple product is not that low-level, and given its dependence on the iPhone... it'd better find solutions.

    3. Re:Qualcomm deserve to die by Anonymous Coward · · Score: 2, Insightful

      Yup that really helps create new technology.

    4. Re: Qualcomm deserve to die by Anonymous Coward · · Score: 2, Insightful

      The boomer phone? Have you ever even met a boomer? If they have a cellphone at all, they probably have a cheap android and I'm not insulting Android here I'm just saying they don't care and go for whatever. Boomers want simple. They want texting, calls, and email.

      If any generation is the 'iPhone favorite', I'd say it was Gen-X. They are all working to the power positions in business and society right now and they want the status symbol. They were on the cutting edge in 2008 and they are riding the champion until it dies. That's one reason why Apple will stay on top for a very very long time. They are the 21st century's Microsoft. They will continue to dominate for at least another 10 years, possibly 20. Microsoft is slowly losing it's grip on computing... but it's been 30 years of dominance and they've got at least a decade more. Apple will dominate even longer. //I work in a Nursing home

    5. Re:Qualcomm deserve to die by Just+Some+Guy · · Score: 5, Interesting

      It's not like they design their own CPUs or anything. That'd be crazytalk!

      So Apple designs almost every component in an iPhone except for the radio. Qualcomm thinks they're entitled to a percent of the whole device price because... well, I don't know. Because they're special or something. Is their magic radio really more valuable to an iPhone than to a cheap Android? Of course not. But they continue to want to charge Apple several times more for the exact same price just because they (think they) can. I can't imagine a plausible scenario in which Apple wouldn't design Qualcomm out of their supply line. Frankly, I wouldn't be surprised if they turned around and offered to license their non-Qualcomm radio at cost to anyone else who wants to use it.

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    6. Re:Qualcomm deserve to die by mysidia · · Score: 3, Insightful

      they did a lot of R&D and pushed cellular forward.

      That was fine, until they got greedy. Now Qualcomm is shooting themselves in the foot.
      They were in a good position, BUT abuse it too much, and people will find alternatives to your products and penalize your business -- even if this hurts Apple as well because of extra costs --- piss off someone too much, and they'll cut off their own nose to spite their face, Or in other words, they'll take vengeance against you even at a net cost to themself.

    7. Re:Qualcomm deserve to die by MightyYar · · Score: 2

      Qualcomm will be fine supplying its chips to other manufacturers

      No, they won't "be fine". MediaTek is the low-cost king with their system-on-a-chip solutions that are bulkier but cheaper for the lower-end phones. Apple owns the high-end and losing their business will bite Qualcomm hard. Samsung also sells in the high end, and with that as their only significant customer, how much price pressure do you think Samsung can bring?

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    8. Re:Qualcomm deserve to die by UnknowingFool · · Score: 3, Insightful

      There is a reason Qualcomm is in the position they are - they did a lot of R&D and pushed cellular forward. On the other hand Apple has done what, "invent" round corners?

      That's two false dichotomies isn't it? It implies that Qualcomm didn't use anti competitive practices in addition to doing R&D work. Also it implies that Apple hasn't done any R&D work because Qualcomm has. Both have.

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    9. Re:Qualcomm deserve to die by Shatrat · · Score: 4, Insightful

      Which is exactly what Apple is trying not to do. They are trying to use their size to squeeze their suppliers and the people who contributed to the R&D behind all the current technology.

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    10. Re:Qualcomm deserve to die by slew · · Score: 2

      Frankly, I wouldn't be surprised if they turned around and offered to license their non-Qualcomm radio at cost to anyone else who wants to use it.

      Apple isn't designing a radio chip (yet). AFAIK, They are talking about designing in exclusively Intel (formerly infineon), or maybe even MediaTek radio chips. They have used Intel radios on previous phones (in markets that didn't value CDMA techology like USA and Korea), so it's no stretch to say they will do that in all their markets (and live with performance of inferior CDMA radios from these other suppliers).

      I don't think Apple has the authority to license Intel and MediaTek modems at cost. Also since alternate phone manufacturers (other than Samsung) don't design their own SoCs, they are generally dependent on Qualcomm SoC and Qualcomm bundles their modems with their SoCs, so they can't afford to piss off Qualcomm,

      Also a few (of the many) reasons that Apple designed their own SoC is so that could put in secret features so that it would be difficult to knock-off features of their phones (other than rounded corners). I doubt they would be selling radio chips that they designed for precisely the same reason. Thus the chance of this happening is pretty much nil, to imaginary i...

    11. Re:Qualcomm deserve to die by Just+Some+Guy · · Score: 3, Informative

      processor from ARM (under license)

      From Wikipedia:

      Companies can also obtain an ARM architectural licence for designing their own CPU cores using the ARM instruction sets. These cores must comply fully with the ARM architecture. Companies that have designed cores that implement an ARM architecture include Apple, AppliedMicro, Broadcom, Cavium, Nvidia, Qualcomm, and Samsung Electronics.

      Yours is an incredibly (and wrongly) narrow interpretation of the Apple/ARM relationship. Apple licenses the right to design their own CPUs, and then actually design them.

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      Dewey, what part of this looks like authorities should be involved?
    12. Re: Qualcomm deserve to die by MachineShedFred · · Score: 2

      You do know that the Palm Pilot came AFTER the Apple Newton, right?

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    13. Re: Qualcomm deserve to die by Dixie_Flatline · · Score: 3, Interesting

      Either that 10% is the most important 10%, or it's not just 10%. Apple's chips murder every other chip on the market. It's not really even close.

      No matter how you slice it, Apple's chip design is second-to-none, and trying to wave your hands in an attempt to diminish Apple's engineering prowess really isn't working.

  3. No Qual Comm would mean no CDMA. by Zombie+Ryushu · · Score: 2

    No Qual Comm would mean no CDMA. If they decide to put MediaTek chips for Cellular support it will happen to have the effect of drastically limiting Carrier Support for these devices.

    1. Re:No Qual Comm would mean no CDMA. by peragrin · · Score: 3, Informative

      Cdma is being phased out anyway for LTE. It just means that Verizon will accelerate plans to phase out and shut down the cdma towers iin favor of the faster 4g LTE ones. (Which they are doing anyways)

      Qualcomm is so far in the wrong here it isn't even funny. They are trying to charge Apple two to three times for the same patent just because Apple has deep pockets. If no one else has to pay twice for the same patent. Not HTC not Nexus and Google.

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    2. Re:No Qual Comm would mean no CDMA. by squiggleslash · · Score: 3, Interesting

      There's quite a bit of legacy hardware out there in the form of home alarm systems, car emergency systems (On Star, for example), that uses Qualcomm's CDMA. (That said, I have to admit to a lack of sympathy here, given that that technology was more or less a proprietary standard, and the manufacturers and various other companies that decided to build it into their devices should have known they were investing in something with a shelf life. But, hey, the people most affected by the shut down are the people who never made the decision to pick that particular technology.)

      Getting rid of 2G GSM is insane, it's the most reliable and ubiquitous voice cellular system in the world and it only needs about 600kHz to provide a bare bones service. AT&T shouldn't have dropped it.

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    3. Re:No Qual Comm would mean no CDMA. by darkmeridian · · Score: 2

      Yes, but there is a doctrine that limits what a patent-holder can charge for a technology that is essential for compliance with an industry standard. Google "FRAND" to get more information.

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    4. Re:No Qual Comm would mean no CDMA. by future+assassin · · Score: 2, Funny

      They are trying to charge Apple two to three times...

      The irony here is awesome.

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    5. Re:No Qual Comm would mean no CDMA. by Solandri · · Score: 3, Informative

      Cdma is being phased out anyway for LTE. It just means that Verizon will accelerate plans to phase out and shut down the cdma towers iin favor of the faster 4g LTE ones. (Which they are doing anyways)

      Voice on CDMA networks still operates over CDMA. Just like voice on GSM still operates over TDMA (which GSM had to abandon for wideband CDMA for 3G data - that's right, CDMA won the GSM vs CDMA war. Your GSM phone is jam packed with CDMA technology. That's why you could talk and use data at the same time on GSM handsets - they had a TDMA radio for voice, and a CDMA radio for 3G data. CDMA phones used a single radio for both, so couldn't do both at the same time.)

      This would be a moot point if everyone switched to VoLTE (voice over LTE). But the carriers have been reluctant to completely switch since their 2G and 3G networks still have better coverage than their LTE networks. It also makes their towers compatible with all devices allowing phone owners to use their handset with any carrier, which would increase competition and lower prices. And you can't be having that.

      Qualcomm is so far in the wrong here it isn't even funny. They are trying to charge Apple two to three times for the same patent just because Apple has deep pockets. If no one else has to pay twice for the same patent. Not HTC not Nexus and Google.

      I agree completely. (They're not charging 2-3x per se, they're trying to get Apple to re-pay to license patents that the supplier Apple bought the Qualcomm chips from has already paid to license. i.e. Qualcomm believes if a patent licensee sells a product using the patent, the buyer also needs to license the patent too. Kind of a value-added tax approach to patent licensing. If they succeed in court against Apple, the Android handset manufacturers are next.)

      But there's a good deal of karmaic justice here. Apple was the one who tried to argue in court that patent damage awards should be based on the entire price of the infringing product, rather than the value of the component which infringed. e.g. If a car offered GPS navigation as a factory option, and a GPS patent holder successfully sued for infringement, they should be awarded damages based on the value of the entire car, rather than the value of the GPS navigation unit.

    6. Re:No Qual Comm would mean no CDMA. by mysidia · · Score: 3, Informative

      Why is that exactly?

      Qualcomm's abuse in essence is double/triple-dipping. Licensing technology based on their patent ONCE, that Apple pays the manufacturer for a component that Qualcomm received royalties for its manufacture, then demanding patent royalties directly from Apple for using the Qualcomm chip.

      Things are probably a little bit more complex than that, but in essence, attempting to double-dip is wrong because patent rights are "Exhausted" in each unit of product that you sell pursuant to the patent rights.

      E.G. Suppose you invent a new type of fencing material, you patent it, and you start selling it.
      If one of your customers resells some of the material they purchased from you to a neighbor, then you don't have a right to go to your customer and collect patent royalties.

      So it is with computer chips. Suppose I manufacture a video camera, and I want to use MP4-AVC encoding, so I buy H.264 encoder chip, and I use the chip to create a recording of captured content ---- H.264 is patented, so the manufacture of the chip had to pay royalties to license the patent.

      Since I did all my encoding with the chip that was licensed from the patentholder': the patent holders' for H.264 have no patent right to charge me royalties again off of the same patent to record encoded content from the chip to a storage medium ---- their patent rights in my product were exhausted, because I already paid for a product that was sold to me in compliance with their patent rights.

      Now it's true the end-user of my product could have to pay them royalties again, because they need to buy software or hardware to decode and/or
      re-encode my content to suit their needs, and the encoder or de-coder will have to use a licensed chip or be itself-licensed.

      Apple probably uses a camera module in their iPhone. In this hypothetical situation.... double/triple-dipping what Qualcomm is said to be doing would be like a patentholder going after OEMs of the Camera module I manufacture that incorporates their licensed H.264 chips demanding patent royalties, and also demanding patent royalties from ME, because I used one of their H.264 chips as a component of my design.

      Now consider how critical quality video compressed encoding formats are in this world....
      the kinds of protocols Qualcomm chips implement are just as if not more important for Cellular communications to work,
      and the alternatives to the chips Qualcomm licenses are greatly inferior in terms of reliability, speed/performance, and power efficiency.

      So Apple just switching out the Qualcomm parts could potentially in the short term mess up the user experience and cause all sorts of usability issues --- no small matter to completely switch to a different chipmaker's designs.

    7. Re:No Qual Comm would mean no CDMA. by UnknowingFool · · Score: 2

      On paper Qualcomm has to follow FRAND licensing. The complaint of Apple and others is that it does not. One of the complaints of Apple is that Qualcomm is charging them for licensing multiple times.

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    8. Re:No Qual Comm would mean no CDMA. by prunus.avium · · Score: 2

      Just to nitpick, GSM was 2G and TDMA only. UMTS was 3G and wideband CDMA (WCDMA).

      Admittedly, beyond layer 2, the packet format was pretty much identical (why reinvent the wheel?), they were two "separate" standards.

      Also, at some point UMTS HSPA was CDMA inside of TDMA inside of WCDMA. I think it became the poster child for over-engineering.

  4. Not that newsworthy by Austerity+Empowers · · Score: 2

    Back in my HW design days, we would routinely design 2-3x the products with different vendor's chips and either make a business decision to scrap the one(s) not chosen, or if we had the money and resources, bring both to market under the same product name. In a few cases (usually when dealing with Intel) that wasn't possible, there was usually some co-marketing money that demanded separate products, and the design had to be so different anyway that it really wasn't the same product anyhow. But in embedded, it's totally possible. It's not so much about secrecy as it is not putting all your eggs in one basket: sometimes the vendor you want doesn't deliver/has a critical bug/goes belly up, you need to be able to succeed anyway.

    I guess no one should treat this as news. We should simply assume that any hardware vendor is going to be designing with multiple options in mind. It's what they go to market with that is interesting (at least to day traders), and that's hard to guess until around launch time unless you have some well placed spies. Very likely most of the HW designers themselves do not know until they get sent to make the sweatshop not screw up.

    1. Re:Not that newsworthy by UnknowingFool · · Score: 3, Interesting

      It is slightly newsworthy in that it hasn't been feasible to make phones without Qualcomm chips until recently. For smaller companies, it would take a lot of work not to use Qualcomm chips/tech that most companies end up paying Qualcomm's royalty fees as there was little they could do. With Intel trying to make modems and Apple willing to invest the necessary R&D to do so, it means trouble for Qualcomm. Because if Apple is successful, other companies like Samsung can use the same technology as Apple.

      I don't know who is right in the Qualcomm/Apple dispute but when a lot of money is at stake, companies will seek alternatives. At the heart of the dispute is $1B that Apple claims Qualcomm owes them for rebates. Apple says Qualcomm stopped delivering quarterly rebates in retaliation of Apple cooperating with the South Korean investigation.

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  5. Product development by sjbe · · Score: 4, Insightful

    On the other hand Apple has done what, "invent" round corners?

    The iPhone basically defined and popularized what we consider the modern smartphone. The iPad did the same for tablets. They defined and popularized the graphical user interface on desktop PCs as well as quite a few other technologies. Any claim that Apple hasn't invented anything or done any R&D that has improved the industry is simply willful ignorance or foolish spite.

    Scoff if you want but someone has to turn those technologies that companies like Qualcomm develop into products that people actually buy. It's hard to argue anybody does a better job of that than Apple. There is a tremendous amount of invention in creating functional integrated products. Not bashing Qualcomm but without Apple they don't have nearly as big a market to sell into. Qualcomm and Apple have different strengths and are sell to different customers bases. Qualcomm sells to other companies and develops technology they can use to make products. Apple sells to individuals and integrates and adapts technology into a coherent product.