SAN JOSE, California (Reuters) – Qualcomm looked to become the sole provider of modem chips for Apple’s iPhone to recover a $1-billion “incentive payment” that Apple demanded, not to block rivals from the market, Qualcomm’s CEO testified on Friday.
The payment from Qualcomm to Apple – some portion of a 2011 deal between Apple and Qualcomm – was intended to ease the technical expenses of swapping out the iPhone’s then-current Infineon chip with Qualcomm’s, CEO Steve Mollenkopf testified at a preliminary with the U.S. Federal Trade Commission.
While such an payment is regular in the industry, the size was not, Mollenkopf said.
Under the 2011 deal, Qualcomm was named Apple’s sole provider of modem chips, which enable cell phones to interface with wireless data networks, in exchange for which Qualcomm consented to give Apple a discount – the correct idea of which has not been uncovered. Apple could pick another provider yet it would lose the discount, viably expanding the expense of its chips.
Antitrust regulators have argued the deal with Apple was part of a pattern of anticompetitive lead by Qualcomm to save its strength in modem chips and exclude players like Intel.
At a federal courthouse in San Jose, California, Mollenkopf affirmed that Apple requested the $1 billion with no assurance of what number of chips it would purchase, which drove the chip provider to seek after a restrictiveness course of action so as to guarantee it sufficiently sold chips to recoup the payment.
Qualcomm was not planning to block rivals like Intel, he said.
“The risk was, what would the volume be? Would we get everything we wanted, given that we paid so much in incentive?” Mollenkopf testified.
Prior in the day, Apple supply chain executive Tony Blevins affirmed that it was Apple’s training to seek after something like two providers and upwards of six for every one of the in excess of 1,000 parts in the iPhone.
The organization quit endeavoring to place an Intel modem chip in the iPad Mini 2 in light of the fact that losing the refunds on Qualcomm’s chips would have made the general cost excessively high, he said.
“They made it very unattractive for us to use another chip supplier,” Blevins said of the rebates. “These rebates were very, very large.”