Is Apple Using a Technicality to Avoid 3G License Fees?

By (Spork)
in Back Page News

 Share

Recommended Posts

Grand Master

(Spork)

Posted
Posted

You may not be aware, but Qualcomm holds a number of patents on modern 3G cellular technology. Any company making a 3G cell phone has to pay patent royalties to Qualcomm. Analyst Sanford Bernstein pointed out in a report this week that Apple appears to be taking advantage of a licensing loophole to avoid paying all those fees for the iPhone. The loophole is estimated to save Apple $290 million in fiscal 2009 alone.

Licensees must pay 5% of the wholesale price of a 3G device to the patent owner. Qualcomm?s website lists over 145 companies that have licensed their 3G technology. The list includes all major makers of 3G handsets. The one notable exception? Apple. One surprise on the list is Foxconn, the Taiwanese manufacturer of the iPhone.

The Bernstein report says that Qualcomm is being paid royalties not on the price Apple charges (average $590), but on the unit price Apple pays Foxconn, a mere $244. So instead of making $23.60 per iPhone, Qualcomm is only seeing $9.70. Apple is able to get away with this because the entire manufacturing process is done externally. Qualcomm seems fine with the arrangement. After all, $9.70 per iPhone is pretty good considering how they fly off the shelves.

1

2

Grand Master

Rudy

Posted
Posted
You may not be aware, but Qualcomm holds a number of patents on modern 3G cellular technology. Any company making a 3G cell phone has to pay patent royalties to Qualcomm. Analyst Sanford Bernstein pointed out in a report this week that Apple appears to be taking advantage of a licensing loophole to avoid paying all those fees for the iPhone. The loophole is estimated to save Apple $290 million in fiscal 2009 alone.

Licensees must pay 5% of the wholesale price of a 3G device to the patent owner. Qualcomm?s website lists over 145 companies that have licensed their 3G technology. The list includes all major makers of 3G handsets. The one notable exception? Apple. One surprise on the list is Foxconn, the Taiwanese manufacturer of the iPhone.

The Bernstein report says that Qualcomm is being paid royalties not on the price Apple charges (average $590), but on the unit price Apple pays Foxconn, a mere $244. So instead of making $23.60 per iPhone, Qualcomm is only seeing $9.70. Apple is able to get away with this because the entire manufacturing process is done externally. Qualcomm seems fine with the arrangement. After all, $9.70 per iPhone is pretty good considering how they fly off the shelves.

1

2

good for them i guess

Grand Master

Subject Delta

Posted
Posted
If Qualcomm doesn't care why would you?

My problem is the shady way Apple does business, and the way they rip off their customers. I am sure Qualcomm do care that they are being cheated out of millions of dollars due to a technicality but as long as US law stays the same they are pretty powerless to stop it. The simple fact is that Apple are charging their customers extortionate amounts for the devices, and not paying fairly for the use of other people's technology (hey I thought it was Microsoft that stole everyone else's ideas :laugh:)

Enthusiast

resol612

Posted
Posted
My problem is the shady way Apple does business, and the way they rip off their customers. I am sure Qualcomm do care that they are being cheated out of millions of dollars due to a technicality but as long as US law stays the same they are pretty powerless to stop it. The simple fact is that Apple are charging their customers extortionate amounts for the devices, and not paying fairly for the use of other people's technology (hey I thought it was Microsoft that stole everyone else's ideas :laugh:)

I hope you have a reliable anti-flame shield. I heard fanboys are vicious.

Veteran

em_te

Posted
Posted

Doesn't sound like a loophole to me. That just seems like the way the law is intended and written.

It's either that, or Qualcomm is double-dipping by requiring Foxcon to pay 5% for using the technology, and then Apple pays another 5% on top of that for selling it.

And then if we want to sell our second-hand phone, maybe we pay another 5% to Qualcomm?

Grand Master

MrA

Posted
Posted
Perhaps due to the fact that Qualcomm produces most of the components for the Iphone?

So we're ignoring the fact that almost none of the components in the iPhone are made by Qualcomm. Lets see, the parts that could be made by Qualcomm but aren't:

- Application Processssor core: ARM

- Graphics core: Imagination Tech

- SoC: Samsung (includes the two above components and many other IP cores)

- Baseband: Infineon

- Wifi/Bluetooth: Broadcom

Source: http://www.phonewreck.com/2009/06/19/iphon...n-and-analysis/

Grand Master

FloatingFatMan

Posted
Posted

I don't see why people think this is a problem? Patent license fees are paid at the point of manufacture, not the point of sale. ALL mobile phone companies do exactly the same thing.

Do you think T-Mobile pay Qualcomm's licensing fees for the HTC phones it rebrands?

Veteran

em_te

Posted
Posted

http://blogs.wsj.com/digits/2009/11/20/doe...hole-on-iphone/

Qualcomm?s patents cover key aspects of newer third-generation networks. So companies delivering 3G products pay patent royalties to the company, which are widely believed to average a little less than 5% of thwholesaleb> price of a cellphone.

Seems to makes sense since it should be the "wholesale" price, which is much cheaper than the "retail" price. If anything, they're not screwing Qualcomm, they're screwing us!

Grand Master

The_Decryptor Veteran

Posted
  • Veteran
Posted
If Qualcomm doesn't care why would you?

Because Apple sux!!!

Who knows really, 3 companies come to an agreement that differs from agreements with other companies, but people don't like one of the companies involved so they make it out to be a bad thing.

This topic is now closed to further replies.
 Share
Go to topic listing

  • Recently Browsing   0 members

    • No registered users viewing this page.

  • Posts

    • EA launches in-game advertising platform for brands to "connect with audiences"

      By George P · Posted

      EA back to doing EA things.
    • what other retro software do yall use

      By BoondockSaint · Posted

      Oh man, the memories.
    • Affinity by Canva 3.2.2.4557

      By Copernic · Posted

      Affinity by Canva 3.2.2.4557 by Razvan Serea Affinity by Canva is a free, all-in-one creative app combining vector design, photo editing, and page layout in a single platform. Originally developed by Serif, it’s now under Canva, offering professional-grade tools without subscriptions. Users get full access to Pixel, Vector, and Layout studios, plus ongoing updates. Designed for Mac and Windows, it empowers designers, illustrators, and content creators to work faster, smarter, and more creatively than ever before. Affinity is a unified, high-performance design platform combining vector, raster, and layout workflows. It offers fully non-destructive editing, advanced curve and shape manipulation, artboards, symbols, and seamless integration of pixel and vector content. The photo engine supports RAW editing, compositing, retouching, and batch processing with macro automation. Layout tools include long-form document support, typographic precision, navigational elements, CMYK-ready print, and Data Merge. Canva AI Studio adds generative tools (Fill, Expand, Edit), Depth Map, Super Resolution, and advanced portrait effects, accessible via Canva Pro or higher. Broad file compatibility and customizable workspaces ensure professional-grade efficiency. Advanced AI features like Generative Fill and Expand are unlocked in Affinity through the Canva AI Studio for users with a Canva premium plan (Pro, Business, Enterprise, or Education). Affinity is truly free. Every tool in the Pixel, Vector, and Layout studios is fully accessible, along with all customization and export options—no limits, no payments required. The app also receives free updates with new features and improvements. Your creativity remains yours. Affinity stores all your work locally on your device. Canva does not use any Affinity content to train AI or develop features, including anything created with Canva AI tools within Affinity. If you export or upload your work to Canva, you remain in full control. Data preferences can be reviewed or updated at any time in your Canva account settings. Why is Affinity free? Curious how this is possible? Here’s the philosophy behind it and how it works. Note: A free Canva account is required to use Affinity. Your account gives access to Affinity along with other Canva products and features. Download: Affinity 3.2.2.4557 | ARM64 | ~600.0 MB (Freeware) Links: Affinity Website | macOS | Screenshot Get alerted to all of our Software updates on Twitter at @NeowinSoftware
    • Finally we can whole-heartedly recommend the AMD 9070 GRE thanks to this discount

      By hellowalkman · Posted

      Finally we can whole-heartedly recommend the AMD 9070 GRE thanks to this discount by Sayan Sen Earlier this month at Computex 2026 AMD released the Radeon RX 9070 GRE for a global audience. We reviewed the GPU and it scored 8 out of 10 for gaming and 7.5 out of 10 for productivity including things like AI performance. The card launched for $550 which we thought was a bit on the higher side, though currently you are getting the chance to get the Gigabyte Gaming variant of the GPU for just $500 thanks to this discount (purchase link under the specs table down below). As such we can finally whole-heartedly recommend this GPU. The card employs Gigabyte's WINDFORCE cooling system which combines multiple design elements such as alternate-spinning Hawk fans, a vapor chamber, and composite heat pipes to manage heat dissipation. The Server-grade Thermal conductive gel further helps in this department. The inclusion of a semi-passive cooling mode allows the fans to remain inactive under low workloads, which allows for reduced noise operation during lighter usage. There is dual BIOS switch that allows toggling between performance and silent modes. The technical specs of the Gigabyte Gaming RX 9070 GRE OC is given in the table below: Specification Value Boost Clock Up to 2920 MHz Game Clock Up to 2340 MHz Stream Processors 3072 Memory Clock 18 Gbps Memory Size 12 GB Memory Type GDDR6 Memory Bus 192-bit Memory Bandwidth 432 GB/s Card Bus Interface PCI Express 5.0 Max Resolution 7680 × 4320 Max Displays (Multi-view) 4 Card Dimensions 288 × 132 × 50 mm (L × W × H) Recommended Power Supply 700 W Power Connectors 2 × 8-pin Display Outputs 2 × DisplayPort 2.1a 2 × HDMI 2.1b Get it at the link below: GIGABYTE Gaming Radeon RX 9070 GRE 12GB GDDR6 GPU (GV-R907GREGAMING OC-12GD): $549.99 + $50 discount with promo code in mail => $499.99 (Sold and Shipped by Newegg US) This Newegg deal is US-specific and not available in other regions unless specified. This is a first-party seller link (at the time of article publishing); ensure that you also purchase from a first-party seller link only. If you don't like it or want to look at more options, check out the previous deals that we have covered, OR you can also visit Amazon US deals page. Get Prime (SNAP), Prime Video, Audible Plus or Kindle / Music Unlimited. Free for 30 days. As an affiliate partner, we earn from qualifying purchases.
    • Politically funny images of the World

      By +primortal · Posted

  • Recent Achievements

    • Week One Done
      Jeroen Wilms earned a badge
      Week One Done
    • Week One Done
      rolfus earned a badge
      Week One Done
    • One Month Later
      Leroy Jethro Gibbs earned a badge
      One Month Later
    • Conversation Starter
      flexorcist earned a badge
      Conversation Starter
    • One Month Later
      AndreaB earned a badge
      One Month Later

  • Popular Contributors

    1. 1
      +primortal
      513
    2. 2
      +Edouard
      205
    3. 3
      PsYcHoKiLLa
      136
    4. 4
      ATLien_0
      88
    5. 5
      Steven P.
      85
    Show More

  • Tell a friend

    Love Neowin? Tell a friend!