Intel: Qualcomm "forced" us to sell modem biz at a 'multi-billion dollar loss'

The chipmaker says Qualcomm's practices stifled market competition

Intel has said it was "forced" to sell its modem chip business to Apple because Qualcomm muscled the company out of the market with anticompetitive practices.

The claims appeared in a brief filed with the 9th US Circuit Court of Appeals on Friday as part of Qualcomm's efforts to try and overturn a decision of an antitrust lawsuit it lost in May to the Federal Trade Commission (FTC).

Steven Rodgers, EVP and general counsel at Intel said his company "was denied opportunities in the modem market, was prevented from making sales to customers and was forced to sell at prices artificially skewed by Qualcomm," in a blog post accompanying the brief on Friday.

Rodgers added that the business was sold to Apple at 'a multi-billion dollar loss' after years of innovation, acquisitions and work to create a profitable modem business.

"We invested billions, hired thousands, acquired two companies and built innovative world-class products that eventually made their way into Apple's industry-leading iPhones, including the most recently released iPhone 11," he said. 

"But when all was said and done, Intel could not overcome the artificial and insurmountable barriers to fair competition created by Qualcomm's scheme and was forced to exit the market this year."

The enforcement of the May ruling was paused in order to hear Qualcomm's appeal. If the appeal fails, the ruling will stand and the company will have to renegotiate its licensing agreements at reasonable prices.

Qualcomm's 'no license, no chips' policy is the one which is being scrutinised by the courts. It involves cutting off the supply to its modem chips to OEMs if they refuse to sign the patent license agreement with Qualcomm.

"These onerous, one-sided terms enable Qualcomm to artificially lower the price of its modems while simultaneously inflating customers' costs of using modem chips manufactured by competitors, like Intel, by charging royalties as large as the price of the modems themselves," said Rodgers.

IT Pro contacted Qualcomm but it refused to comment on the matter.

As part of Apple's settlement of the years-long lawsuit with Qualcomm, separate to the antitrust lawsuit, the iPhone maker signed a six-year global patent agreement with Qualcomm. This suggests that Qualcomm will once again supply modem chips to Apple for future iPhones.

Because Apple settled with Qualcomm at a similar time to Intel announcing that it would exit the 5G modem chip space, it hasn't been established whether Apple settled because Intel was leaving the space or Intel left because of Apple's settlement.

With Apple's $1 billion (£775 million) acquisition of Intel's modem chip business set to complete before the new year, many have predicted that Apple will begin to develop its own 5G chips in the coming years.

Intel has said that although it's selling off its modem chip business to Apple, it will continue to develop 5G chips for other devices such as 'always-connected PCs' and autonomous cars.

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