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Qualcomm CEO Defends Chip Licensing Business in FTC Study



  Qualcomm and the FTC face the US District Court in San Jose.

Qualcomm and the FTC are in front of the US District Court in San Jose, California.


Stephen Shankland / CNET

The Federal Trade Commission believes that your phone is being hampered by Qualcomm's business practices. However, Steve Mollenkopf, Chief Executive of Qualcomm, believes that the way his company sells chips to smartphone makers is best for everyone involved.

Qualcomm's policy "No license, no chips" is at the heart of the FTC case against Qualcomm . which lawyers are arguing this month before Judge Lucy Koh in the US District Court in San Jose. Mollenkopf was one of the witnesses who testified on Friday.

The policy requires companies to approve Qualcomm's patents before they can sell them chips. Qualcomm customers like Apple do not like that.

Mollenkopf says the practice is simply the best way to do things for the entire industry, not just his company. That's because Qualcomm's patent licenses cover far more technologies than a phone that only sticks to its company's modem chips, allowing mobile phones to communicate with mobile networks.

"We only sell to companies with a license because not all IP addresses [intellectual property] is covered in the chip. What we want to do is make sure the [phone makers] are covered," said Mollenkopf. He referred to the security framework that is used as an example when phones connect to a network. "It's not in the chip, it's not in the cell phones, but in all these things," said Mollenkopf. "We're generating a huge amount of iP that gets the system up and running."

The FTC, backed by the modem-chip competitor Intel and the iPhone maker Apple, filed a lawsuit two years ago, arguing that Qualcomm had a monopoly on modem chips and had been harmed by trying to gain its power to obtain. The study has shown how the most important business of tech, smartphones, works, and how suppliers are fighting for dominance and profit.

Apple's 2011 and 2013 purchase of Qualcomm's modem chips are important examples. For example, prior to the 2011 agreement, Apple turned to Qualcomm for the ability to exclusively deliver Qualcomm's modem chips in the iPhone for a $ 1 billion incentive payment, Mollenkopf said. An incentive payment was made, although the amount has not yet been disclosed.

Tony Blevins, Apple's vice president for procurement, offered a very different view of the Apple Qualcomm partnership in earlier statements on Friday.

As source components, we usually try to get at least two and probably no more than six sources, "he said." We believe that competition and market forces are very important to us in order to get the best leverage. There would be no competition with exclusivity. "

Qualcomm said Qualcomm was anything but unique, as one customer had to buy a license before purchasing its products, and another chip maker tried it once, but a call from Blevins to his CEO changed that approach.

Despite this, Mollenkopf defended his company's practice, and even considered divesting his technology licensing business from his chip distribution business, opposed by Mollenkop, who was recently named CEO.

"By we can invest in technology early in the licensing process. It generates a lot of IP, "Mollenkopf said, using the proceeds to research and develop new technologies, he added.


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