Qualcomm, the largest maker of mobile phone chips, has cut its profit forecast, warning investors that Apple is withholding royalty payments amid a legal battle.
Apple sued Qualcomm in January, accusing the company of overcharging for its patented technology.
Qualcomm said on Friday it would defend its right to receive “fair value” for its “technological contributions”.
The licence agreements had been in place for a decade, it said.
“These licence agreements remain valid and enforceable,” Don Rosenberg, executive vice president and general counsel of Qualcomm, said.
Qualcomm’s share price dropped 3% following the latest update, which came less than two weeks after the company reported quarterly earnings. Qualcomm said its forecast at that time involved scenarios with reduced payments – not their complete absence.
Qualcomm derived 40% of its revenue from Apple and Samsung Electronics in its most recent financial year.
In a statement, Apple said: “Without an agreed-upon rate to determine how much is owed, we have suspended payments until the correct amount can be determined by the court.”
Apple’s legal action in January followed a complaint by the Federal Trade Commission, a US regulator, alleging Qualcomm had used “anticompetitive practices” to maintain a monopoly over key technology.
Apple has also sued Qualcomm in China and in the UK.
Source: BBC News