A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, on April 18 2017. Picture: REUTERS/MIKE BLAKE/FILE PHOTO
A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, on April 18 2017. Picture: REUTERS/MIKE BLAKE/FILE PHOTO

Bengaluru/Taipei — Chip maker Qualcomm has escalated its patent battle with Apple, suing Foxconn and three other Taiwanese manufacturers that supply iPhone and iPad components for not paying royalties.

Apple filed a lawsuit against Qualcomm in January, accusing it of overcharging for chips and refusing to pay about $1bn in rebates — a move that came days after the US government accused the chip maker of using anticompetitive tactics to maintain a monopoly over key semiconductors in mobile phones.

Qualcomm has called Apple’s suit baseless and has said the iPhone maker was encouraging regulatory attacks on its business.

On Wednesday, Qualcomm said in its complaint that Apple had advised the four contract manufacturers to withhold royalty payments and agreed to indemnify them against any damages resulting from the breach of their agreements with Qualcomm.

It did not disclose the sum of the alleged unpaid royalties in the complaint which was filed in the US District Court for the Southern District of California. Qualcomm is seeking an order for the suppliers to comply with contractual obligations as well as damages.

Foxconn, formally known as Hon Hai Precision Industry Company and one of Apple’s main suppliers, said it had not yet received documents regarding the lawsuit and declined further comment.

Wistron Corp also said it had not received the relevant documents. Pegatron Corp declined to comment, while Compal Electronics did not offer immediate comment.

In April, Qualcomm slashed its profit and revenue forecasts for the current quarter, saying it excluded revenue receivable from the four contract manufacturers.

Qualcomm, the largest maker of chips used in smartphones, said in its filing that Apple was trying to force the company to agree to an "unreasonable demand for a below-market direct licence".

Apple reiterated that it had been trying to reach a licensing agreement with Qualcomm for more than five years but the company had refused to negotiate fair terms.

Qualcomm’s shares fell 1% to $55.36 on Wednesday while Apple’s shares slid 3.4% to $150.25.

Shares in the Taiwanese suppliers fell between 0.4% and 2% in early Thursday trade except for Compal, which rose 1.5%.

Reuters

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