China Underground > China Finance > The battle between Qualcomm and Apple in China

The battle between Qualcomm and Apple in China

A Chinese court ordered a ban on the sale of some old models produced by Apple in China for the violation of two Qualcomm patents.

Both companies are based in California, but a significant part of their turnover is generated in China.

The two patents concern the possibility of modifying photographs and navigating between applications with the touchscreen.

Apple appealed against the court order in Fuzhou, which banned the sale of seven old iPhone models (iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X).

It is unclear whether the ban will actually be applied, whether it will be limited to Fujian, or if it will be extended across the territory.

The case that Qualcomm wanted, is part of a global patent dispute between the two American companies and covers dozens of legal proceedings.

No doubt the Chinese court’s decision casts some uncertainty on Apple’s business in one of its main markets.

Apple in a statement on Monday said that all iPhone models are still on sale in China and have appealed against the court’s decision.

According to an anonymous analyst who previously worked with Qualcomm, quoted by Reuters, is extremely unlikely, if not impossible that Apple ceases sales in China, highlighting the fact that this episode is just one of the many battles of a very more extensive war between the two Californian giants.

The three models presented by Apple in September are not affected by the procedure.

According to Apple, Qualcomm’s efforts to ban their products are just another “desperate move” by a company whose illegal practices are being investigated by legislators around the world.

China, Hong Kong, and Taiwan are Apple’s third largest market, accounting for about a fifth of the company’s revenue. For Qualcomm, however, this market represents the largest share of its earnings, something like 67% of the total in 2018.

Qualcomm is instead one of the major suppliers of chips for smartphones and has denounced Apple towards the end of 2017, accusing it of having infringed some patents regarding the modification of photographs and the management of the app on a touchscreen.

In July, the same court had banned the import of some microchips produced by Micron Technology Inc in China, for the violation of patents held by Taiwan’s United Microelectronics Corp (UMC).

A Chinese provincial court is separated from Beijing’s specialized intellectual property court, and therefore one of the two parties may request a ban on the sale of a competing product without the latter actually being able to defend itself.

Furthermore, an American patent does not necessarily apply to Chinese soil, unless the patent has also been registered in China.

According to IP lawyers, the appeal process could take the case from the Fujian court, up to the supreme court in Beijing, a naturally long, delicate and complex process.

This battle, however, comes at a particularly unstable moment, in the midst of the trade war between Trump and China, and which sees some of these hi-tech protagonists involved in the events.

Although originally it was not tied to particular political situations, considering the importance of the players, and the recent development of events at international level, this dispute could (and probably already has) be somehow absorbed in the commercial war between the United States and the Asian giant.

A few months ago, Trump blocked the merger between Qualcomm Inc. and Broadcom, a technology investment fund linked to Huawei, invoking national security.

Such accusations have now been addressed innumerable times by Huawei (and ZTE) by various international governments.

Huawei and ZTE were hit, for circumventing the US sanctions against Iran and North Korea.

Qualcomm is also a key chip supplier for many famous Chinese brands such as Xiaomi, Oppo, Vivo, OnPlus, while Apple is a direct competitor of Huawei, which was recently hit in North America by the arrest procedure against the founder’s daughter of Huawei, Meng Wangzhou.

According to some Qualcomm executives, tensions between the two nations would not have influenced the court’s verdict, perhaps also to avoid embarrassing reactions at home.

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