Apple files $1 billion lawsuit against chip supplier Qualcomm

WASHINGTON–On Tuesday, the U.S. Federal Trade Commission filed a lawsuit against Qualcomm, saying the San Diego-based company used its dominant position as a supplier of certain phone chips to impose "onerous" supply and licensing terms on cellphone manufacturers. Qualcomm said it would contest the FTC complaint. Qualcomm was the sole supplier of modem chips for Apple’s phones until the release of the iPhone 7 in September. Intel Corp supplied about half of the modem chips for the newest models, said Stacy Rasgon, a senior analyst at Bernstein Research. Intel's shares closed up 1 percent at $36.94 after the Qualcomm suit was announced. Apple made the move around the same time that Samsung, which had switched to using its own internal chips for its Galaxy S6 phones, returned to Qualcomm for the Galaxy S7. Qualcomm "has been able to manage through (the Apple contract loss) pretty well because they got back Samsung at the same time," Rasgon said. Apple is known for seeking multiple suppliers to keep prices down, said Jim Morrison, vice president of technical intelligence for TechInsights, which tears down devices to analyze their parts. On Tuesday, the U.S. Federal Trade Commission filed a lawsuit against Qualcomm, saying the San Diego-based company used its dominant position as a supplier of certain phone chips to impose "onerous" supply and licensing terms on cellphone manufacturers. Qualcomm said it would contest the FTC complaint. Qualcomm was the sole supplier of modem chips for Apple’s phones until the release of the iPhone 7 in September. Intel Corp supplied about half of the modem chips for the newest models, said Stacy Rasgon, a senior analyst at Bernstein Research. Intel's shares closed up 1 percent at $36.94 after the Qualcomm suit was announced. Apple made the move around the same time that Samsung, which had switched to using its own internal chips for its Galaxy S6 phones, returned to Qualcomm for the Galaxy S7. Qualcomm "has been able to manage through (the Apple contract loss) pretty well because they got back Samsung at the same time," Rasgon said. Apple is known for seeking multiple suppliers to keep prices down, said Jim Morrison, vice president of technical intelligence for TechInsights, which tears down devices to analyze their parts. –Reuters