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Apple to design iOS devices without Qualcomm parts

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Apple Threatens To Drop Qualcomm Wireless Chips From iPhone
A sign is posted at a Qualcomm office on November 1, 2017 in San Jose, California. As Apple and Qualcomm remain locked in a lengthy legal battle over patents and royalties held by Qualcomm, Apple is beginning to design prototypes of iPhones and iPads that will use Intel modems instead of Qualcomm modems. — Getty Images/AFP

APPLE, INC. is designing iPhones and iPads for 2018 that don’t use components from Qualcomm, Inc. amid an escalating dispute between the companies, according to a person familiar with the matter.

The product plans are in the early stages and may still change, said the person, who asked not to be identified because the matter is private. Apple may use modem chips from Intel Corp. and MediaTek, Inc. instead of Qualcomm’s, the person said. Apple made the decision amid a dispute over the iPhone maker’s access to the San Diego-based company’s proprietary technology, said people familiar with the matter.

Apple chip orders for the iPhone add as much as $1.75 billion a year for Qualcomm, according to an estimate by Raymond James & Associates. If that business went away it would represent about a 7.5% cut to the chipmaker’s annual sales, based on last year’s total revenue of $23.5 billion.

Apple and Qualcomm have been fighting each other over patent licensing with the iPhone maker accusing the chip designer of abusing its market dominance with high royalties. Qualcomm has fought back and is seeking to stop Apple from making and selling its smartphones in China.

An Apple representative said the company doesn’t comment on future products.

Apple made the decision about next year’s products because Qualcomm withheld software needed to test chips in prototypes, the Wall Street Journal reported.

“The Qualcomm modem that could be used in the next generation iPhone has already been fully tested and released to Apple,” Qualcomm said in a statement to Bloomberg News. “We are committed to supporting Apple’s new devices consistent with our support of all others in the industry. Qualcomm’s wireless solutions remain the gold standard for premium tier smartphones. — Bloomberg

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