Qualcomm: Apple demanded $1bn to supply iPhone modem chips

Qualcomm CEO Steve Mollenkopf demanded exclusivity in return

Qualcomm CEO Steve Mollenkopf claims that Apple's demand for a $1 billion upfront fee to be paid in return for the privilege of supplying modem chips is the reason why no other company would supply Apple with the technology.

That, claimed Mollenkopf testifying in court on Friday, is also why Qualcomm demanded exclusivity in return.

Under the terms of the 2011, Apple would lose the ‘rebate' from Qualcomm if it selected another supplier for the modem chips. Infineon had supplied the technology to Apple up until 2011.

Antitrust regulators had argued that this deal with Apple formed part of a pattern of anticompetitive behaviour by Qualcomm, structured to prevent competition from potential rivals, such as Intel.

But according to Reuters, Qualcomm demanded exclusivity from Apple in return as it could not otherwise be sure whether it would sell sufficient volumes to justify the payment.

"The risk was, what would the volume be? Would we get everything we wanted, given that we paid so much in incentive?" Mollenkopf told the court.

Earlier in the day, according to Reuters, Apple supply chain executive Tony Blevins had claimed in court that it was Apple's practice to have at least two suppliers for each of the 1,000 or so components that go into the iPhone.

The $1 billion payment from Qualcomm, paid in the form of a rebate, prevented Apple from using an Intel communications chip in the iPad Mini 2 because Apple would lose the rebate, Blevins testified. "They made it very unattractive for us to use another chip supplier," Blevins said. "These rebates were very, very large."

The antitrust case comes as the two companies remain at loggerheads, with Apple seeking to have Qualcomm patents invalidated, while Qualcomm has sought to block the sale of iPhones around the world, claiming intellectual property infringement.