Intel Says Qualcomm Forced It Out Of Smartphone Modem Market

Intel has filed a court brief alleging that Qualcomm forced it out of the market for smartphone modems, as part of a “brazen scheme” built on illegal business practices.

The brief comes as Qualcomm prepares to challenge a court decision issued in May that found in favour of a FTC decision that Qualcomm’s licensing practices for its wireless modem technology broke competition rules.

The ruling obliges Qualcomm to change those licensing practices, but is not being enforced pending the company’s appeal, which is expected to begin in early January.

In the meantime, a number of Qualcomm opponents have filed amicus briefs with the 9th US Circuit Court of Appeals, urging it to confirm the earlier decision.

‘Brazen scheme’

A trade group representing major automakers and two leading automotive suppliers filed its own a brief arguing the prices of cars equippped with 5G technology will rise unless Qualcomm’s practices change.

Intel’s comments relate to its wireless modem business, which it built up over a decade, investing billions of dollars into the unit only to sell it to Apple earlier this year for a fraction of that amount.

Apple had used Intel modems as an alternative to those of Qualcomm, but in April agreed to switch to Qualcomm chips as part of a broader intellectual property settlement.

Intel then exited the market in July, selling its modem business to Apple for a mere $1 billion (£770m).

Intel general counsel Steven Rodgers said Intel had not been able to overcome the “artificial and insurmountable barriers to fair competition” created by Qualcomm’s “brazen scheme”, which he said had been “carefully crafted and implemented over many years”.

Qualcomm’s dominance of the wireless chip market came not through “ingenuity and business acumen”, but was instead sustained by a “web of anticompetitive conduct”.

‘Higher prices’

This allowed the company to “coerce customers, tilt the competitive playing field and exclude competitors”  while “shielding itself from legal scrutiny and capturing billions in unlawful gains”.

“Intel suffered the brunt of Qualcomm’s anticompetitive behaviour, 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,” Rodgers said.

Meanwhile, auto manufacturers said Qualcomm refused to license its technology to chipmakers, instead carrying out “unnecessary, costly, and inefficient licensing negotiations” with the firms that build automobiles.

The resulting inefficiencies create higher prices that are ultimately borne by consumers, they said.

Qualcomm declined to comment.