Apple demanded $1 billion for chance to win exclusive iPhone contract

Qualcomm we sought iPhone modem exclusivity since Apple wanted $1 billion'incentive payment to switch

Qualcomm we sought iPhone modem exclusivity since Apple wanted $1 billion'incentive payment to switch

Apple split orders between Intel and Qualcomm in 2016 and moved all of its orders to Intel a year ago for its new iPhones.

Apple supply chain executive Tony Blevins testified last week that Apple has considered sourcing 5G modems from Samsung and even MediaTek. Those networks are expected to start rolling out this year and provide faster data speeds than current 4G networks.

Antitrust regulators have argued the deal with Apple was part of a pattern of anticompetitive conduct by Qualcomm to preserve its dominance in modem chips and exclude players like Intel. Apple stopped adding Intel's modems into their iPad Mini 2 because they didn't want to lose Qualcomm's incentive.

Qualcomm was the sole supplier of cellular modems for Apple's devices between 2011 and 2016. As a result of the $1bn payment, Qualcomm offered Apple a rebate - the size of which hasn't been revealed - under the condition that it would only apply if Qualcomm chips were exclusively used. However, its business relationship with Qualcomm changed "in a very profound and negative manner" after the lawsuit was filed in 2017.

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"The entire concept of Project Antique was to find a second supplier. Would we get everything we wanted, given that we paid so much in incentive?" he testified. Mollenkopf testified. Qualcomm is being accused of trying to block rivals, such as Intel, which Mollenkopf denied.

Blevins said that talking with Samsung, whose Galaxy and Note devices compete against the iPhone, is "not an ideal environment" for Apple, but that Samsung is now the largest component supplier to Apple.

Since the negotiating team from Cupertino didn't specify a guaranteed number of modems Apple will be ordering from Qualcomm, the chip maker was forced to pursue the infamous exclusivity agreement for iPhone modems that it now sues Apple for breaking. Citing sources, Bloomberg previously reported that Apple would not release such a phone until 2020.

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