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Apple vs. Qualcomm: Apple’s Likely Secret End Game


Apple has apparently been trying to force Qualcomm to lower its licensing prices recently—talking its OEMs (original equipment manufacturers) into stopping payment to Qualcomm and agreeing to pay the OEM’s legal fees if they are sued, which they recently were. Apple’s hostile action against Qualcomm is very difficult to parse because it seems incredibly tactical and short sighted.

Clearly, Apple seems to want to get a big discount from Qualcomm, which might give them a slight cost advantage and offset the massive margin pressure the company is under. Apple is somewhat famous for driving supplier costs down to unaffordable levels (One of the sayings in Silicon Valley is, “You do business with Apple once.”). But after a few short months the other phone OEMs would get the same discount, convert it into lower prices, and put even more price pressure on Apple. All this effort and legal cost for even a year advantage seems ill-conceived and Apple isn’t known for being stupid.


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