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Qualcomm: Apple Shared Chip Code with Intel
By Mike Freeman
Posted: November 3, 2017 9:00am PDT

Qualcomm has filed a new lawsuit accusing Apple of handing over confidential software code for controlling cellular modems to Intel -- Qualcomm's arch rival in smartphone chips.

The San Diego wireless company filed the breach of contract lawsuit in Superior Court in San Diego on Wednesday, escalating the increasingly bitter legal war between the two technology companies.

Thursday, Qualcomm declined to comment. Apple didn't respond for a request for comment.

Up until now, the Apple/Qualcomm legal war has centered on a patent royalty dispute. But this latest salvo involves cellular modem chips that Qualcomm continues to supply to Apple.

In 2010, Qualcomm became the exclusive supplier of cellular modems for iPhones -- in part because it was the first to market with fast, 4G LTE chips.

Last year, Apple added Intel as a second supplier for iPhone 7 models, splitting its cellular modem supply roughly 50/50 between Intel and Qualcomm. That split continues with Apple's latest iPhone models that hit stores this fall.

Qualcomm contends that during negotiations to buy Qualcomm's cellular modem chips that link smartphones to cellular networks, Apple demanded unprecedented access to Qualcomm's "very valuable and highly confidential software," including source code.

"The source code is the magic sauce that makes the modem work," said Jim McGregor, principal analyst with industry advisory firm Tirias Research. "You can understand why Qualcomm has a concern. Apple is using modems from two companies, and one of those companies is significantly behind Qualcomm in terms of technology" performance.

Qualcomm provided Apple with a limited license that grants restricted access to the software and source code.

Qualcomm contends this summer that Apple requested this proprietary information and included an Intel engineer as "CC'd persons" on a distribution list.

Qualcomm alleges other potential violations of the confidentially agreement that may have resulted in Intel getting access to Qualcomm's confidential software.

Under the agreement, Qualcomm would be allowed to audit Apple to ensure that its software was stored on authorized computers in specific locations with restricted access. The agreement also restricted Apple engineers who examined Qualcomm's code from working with Intel on modems.

In August, Qualcomm requested that Apple investigate. Apple declined, according to the lawsuit.

Earlier this week, the Wall Street Journal reported that Apple had begun designing iPhone and iPad prototypes without Qualcomm modems. The article cited unnamed sources saying Apple may ditch Qualcomm because the San Diego firm was withholding software critical to testing modem chips.

Qualcomm has also accused Apple of violating the software master agreement in separate lawsuits that pending in federal court. Much of the details surrounding those claims have been redacted.

The lawsuit seeks unspecified monetary damages and/or injunctive relief. Qualcomm's shares ended trading Thursday up 2.6 percent to $54.84 on the Nasdaq exchange.


© 2017 San Diego Union-Tribune. Syndicated here under contract with YellowBrix, Inc. All rights reserved.
 

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