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Intel and Samsung Gang Up on Qualcomm, Backing FTC Monopoly Suit

Samsung Electronics Co. and Intel Corp. weighed in with their own gripes about Qualcomm Inc. while cheering on the U.S. Federal Trade Commission’s lawsuit accusing the chipmaker of trying to corner the market for semiconductors used in smartphones.

The South Korean company, one of Qualcomm’s largest customers, and Intel, one of its biggest competitors, filed arguments Friday in support of the FTC’s case against Qualcomm. Both contend the San Diego-based company stops them from competing fairly against it by leveraging patents that cover the fundamentals of modern phone systems.

“Intel is ready, willing, and able to compete on the merits in this market that Qualcomm has dominated for years,” Intel said in a posting on its website. “But Qualcomm has maintained an interlocking web of abusive patent and commercial practices that subverts competition on the merits.”

Samsung claims its in-house chip unit is artificially held back by Qualcomm’s unwillingness to license its technology. 

License Refused

“Despite having requested a license from Qualcomm, Samsung cannot sell licensed Exynos chipsets to non-Samsung entities because Qualcomm has refused to license Samsung to make and sell licensed chipsets,” Samsung said in a filing. Samsung, the world’s biggest smartphone maker, uses a mixture of suppliers -- including itself and Qualcomm -- for the crucial components in its handsets.

Qualcomm didn’t immediately respond to requests seeking comment on the filings.

The company is trying to fend off a series of legal and regulatory challenges to its business practices around the world, including a suit by Apple Inc., one of its largest customers. The chipmaker gets most of its profits from selling the rights to use patents that are essential to all modern mobile phone systems. Many of the cases target the link between those license fees and its semiconductor business.

Earlier Friday, the FTC urged a judge to reject Qualcomm’s request for dismissal of the agency’s case. The allegations “present a forceful antitrust case,” the commission said in a filing in federal court in San Jose, California. A hearing is set for June 15.

Qualcomm General Counsel Don Rosenberg said last month that the FTC’s complaint is riddled with ”fallacies and failures.”

“The Federal Trade Commission’s latest submission to the court does nothing to cure the fundamental flaws in its complaint against Qualcomm: no coherent theory of competitive harm and no allegations of the type of conduct that the antitrust laws are designed to address,” Qualcomm said Friday in a statement. “The complaint therefore should be dismissed.”

Shares of Qualcomm, the world’s fourth-largest chipmaker, have slumped this year on concern that the growing legal challenges will hurt its main source of profit. The stock has lost 15 percent in 2017 compared with a 15 percent gain by the benchmark Philadelphia Stock Exchange Semiconductor Index.

The case is Federal Trade Commission v. Qualcomm Inc., 17-cv-00220, U.S. District Court, Northern District of California (San Jose).

— With assistance by Susan Decker

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