UPDATE: In an official statement sent to The Tech Portal, a Qualcomm spokesperson has outright denied the rumors surrounding the company. It said that Qualcomm never abused its market dominance to fend off competition and its agreement with Samsung has never prevented them from selling their Exynos chips to third-party manufacturers.
Qualcomm has never stood in the way of Samsung selling chips to third parties, and nothing in our agreements has ever prevented Samsung from doing so. Any statement to the contrary is false.
This is the complete statement but we’ve reached out to the Qualcomm representative with a questionnaire of our own and will update you once we hear back from them.
PREVIOUSLY: Here’s a significant observation for you readers — have you wondered why Samsung integrates its powerful in-house Exynos chips only in its own Galaxy smartphones? Why doesn’t it enable other phone makers to leverage its technology?
Well, we’ve long thought that the Korean giant has been maintaining this practice to prevent others from gaining access to its in-house technology. But, South Korea’s Fair Trade Commission (KFTC) claims that our beliefs are completely false because this is Qualcomm’s doing. Yes, the widely popular mobile chipmaker is said to have prevented Samsung from selling its own Exynos chipsets to third-party phone makers.
This provision has come to light, courtesy of the FTC’s report on the case of Qualcomm’s abuse of its market power. The FTC states the following in its official report:
Samsung Electronics has been blocked from selling its modem chipsets to other smartphone manufacturers due to a license deal it signed with Qualcomm.
The Commission’s report mentions that Samsung tried supplying its own Exynos processors to other hardware makers but Qualcomm blocked them from doing so. The latter abused the power of its standard-essential patent, including technical standards such as Wi-Fi or 4G and licensed under fair terms, to prevent Samsung from selling most of their silicon chips to hardware makers like Huawei, LG, Xiaomi, and others. And this has been continuing for the last around 25 years. Yes, twenty-five!!
The licensing agreement between Qualcomm and Samsung was signed back in 1993, which permitted the latter to manufacture their own handsets with second-gen CDMA patents. This agreement also permitted the Korean giant to borrow technology and produce its own processor chips — but for use only by themselves and not others. But, Samsung’s chip business has still grown tremendously in the last year — helping it balance out the losses caused due to Galaxy Note 7 explosions.
The said licensing deal was working out fine for both technology giants until recent times when the technology was upgraded to now package everything on the chipset. This was called system-on-chip and it brought together modems, graphic processing units, as well as application processors on a single wafer of silicon.
This triggered Samsung to request a change in its contract with the chipmaker, but Qualcomm didn’t want to lose market share which it had hogged with its Snapdragon chips. So, it proposed a deal where third-party would either have to pay Qualcomm licensing fees or the Korean giant could shoulder the burden of the same. Samsung agreed to the contract, even though it ran afoul on fair trade terms, but Qualcomm went back on its word in 2013. And the talks broke down, making Samsung deploy the chips only through their Galaxy smartphones.
The report further goes on to provide legal justification for the massive $853 million fine imposed on the American chipmaker due to its ‘anti-competitive practices’ back in December 2016. Qualcomm further bullied Samsung by violating the fair, reasonable, and non-discriminatory (FRAND) terms. But, Qualcomm is planning to appeal against the Commission’s decision for violation of due process rights for American companies. The chipmaker further continues to add,
We strongly disagree with the KFTC’s announced decision, which Qualcomm believes is inconsistent with the facts and the law, reflects a flawed process, and represents a violation of due process rights owed [to] American companies.
Further, for those unaware, Cupertino giant Apple and Qualcomm are also embroiled in a legal battle. The former has slapped the U.S chipmaker with a hefty $145 million lawsuit in the U.S, U.K and China, saying that the latter violated patent rights that rightly belonged to them. For its unfair practices, the company is facing surprisingly massive fines of around $975 million in China and $1 billion in the United States.
In January, the chipmaker was also sued by the U.S Federal Trade Commission for allegedly using its market dominance to subdue its competitors. It filed charges against the company saying that it maintains a ‘no license, no chips’ policy under which it will only supply baseband processors on the condition that phone manufacturers agree to Qualcomm’s preferred license terms. And those who refuse to pay royalty fee are not provided access to their chips.
