Qualcomm and Apple are currently in the midst of a legal battle and Apple just took it a step further. According to a press release that Qualcomm put out on Friday, Apple has informed the company that it is withholding "payments to its contract manufacturers for the royalties those contract manufacturers owe under their licenses with Qualcomm", and this if the quarter that ended on March 31st 2017. Furthermore, Qualcomm notes that Apple has said it will continue to do this until the two companies resolve their legal matters. Qualcomm says that Apple is "improperly interfering with Qualcomm's long-standing agreements with Qualcomm's licensees".
Qualcomm's executive vice president and general counsel, Don Rosenberg noted that Apple has "unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade." He also mentions that Apple meddling in Qualcomm agreements in which they are not a party of, is the latest step in their global attack on Qualcomm. stating that Qualcomm will "continue vigorously to defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry."
Due to this, Qualcomm has been forced to adjust their guidance for the third fiscal quarter of 2017. They now estimate that their revenues will be $4.5 billion to $5.6 billion, instead of $5.3 billion to $6.1 billion. That's a pretty big drop, and will more than likely, unless their guidance proves to be off, it'll be about up to a 21% decrease year-over-year for Qualcomm. The third fiscal quarter of 2017 is April 1st through June 30th, 2017 – the current quarter, or the second quarter on the calendar year.
For those that are not aware, Qualcomm, Apple and just about every other tech company on the planet, pays royalties to other companies. Whether it be for the use of their patents or technology. Qualcomm has a ton of patents, and a large number that deal with CDMA networks – which both Sprint and Verizon still use – so they get a large number of royalties from many companies that have devices on Sprint or Verizon's networks, including Apple and Samsung. It's a business model that is quite popular, and it is actually what keeps Microsoft's Xbox and Skype divisions in business, as they get a few bucks from every Android product sold. It is unfair for Apple to mess with Qualcomm's agreements with other companies, and this could lead to a bigger legal issue for both companies, only time will tell.