David Rosenthal: belief

Transcript context

…This, I think, ends up being a big win for Qualcomm's lobbyists. I think they had great relationships with the US government and always have since the early days in being a government contractor. A lot of people that we talked to or at least that I talked to, viewed this as Qualcomm being able to call in a favor and say, this is a national security concern, don't you think? We're calling in the favor now. It's totally true. This deal was going to go through, and Qualcomm was going to be everything you were just talking about with Broadcom, which would've been very—especially now, we know about semiconductors. This is one of the huge wins of the Trump administration for America was keeping Qualcomm an independent American company. Whether it was Qualcomm calling in a favor, I think we can all look back in 2022 and be like, this was an enormous win. Yup. In 2017, going back one previous year, both the US Federal Trade Commission and Apple sue Qualcomm for basically the same thing saying that Qualcomm was using its market position as the dominant smartphone modem supplier to force manufacturers into paying excessive fees. This is one that I want to sort of dive in on. We spent a bunch of time advancing through the timeline to really get to this particular point, which I think is a great place to zoom in on Qualcomm's strategic position today, is this Apple lawsuit. Some background, Apple has always used either Samsung processors in the first iPhones until they switched to their own, but they still had to pay Qualcomm patent royalties for whatever RF stuff they were using. Let's treat the CPU as its completely own world transitioning from Samsung to the A Series processors. Apple probably has to buy stuff from Qualcomm. Maybe they could look somewhere else, but either way, they're paying Qualcomm the licensing for it. Today, Apple does use Qualcomm cellular modems, which started in 2011. There was just one year where they used Intel or they did not use Qualcomm. We're going to talk about that. The way that I essentially perceive this and why Apple eventually initiated the lawsuit is Qualcomm got greedy. They had patents on technologies that were part of standards that were set by industry consortiums all over the world, and they leveraged those patents in basically every way possible. Here's the economics as far as I could sort of suss it out. They asked Apple for $7.50 cents per phone sold, which comes to about $2 billion a year plus an additional $8 to $10 when they were going to raise prices later. You quickly get to a situation where Qualcomm was sort of expecting Apple to pay $17 just to license patents.…

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