Apple was a key customer for LTE baseband chipsets. In 2011, Qualcomm signed an agreement with Apple, committing to make significant payments to Apple on condition that the company would exclusively use Qualcomm chipsets in its “iPhone” and “iPad” devices. In 2013, the term of the agreement was extended to the end of 2016.
The agreement made clear that Qualcomm would cease these payments, if Apple $APPL commercially launched a device with a chipset supplied by a rival. Furthermore, for most of the time the agreement was in place, Apple would have had to return to Qualcomm a large part of the payments it had received in the past, if it decided to switch suppliers. This meant that Qualcomm’s rivals were denied the possibility to compete effectively for Apple’s significant business, no matter how good their products were. They were also denied business opportunities with other customers that could have followed from securing Apple as a customer.
In fact, internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel $INTC. Qualcomm’s exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end.
Shortening shares pre-market is difficult and I advice it. Currently Qualcomm’s share price has been moving wildly in both directions pre-market.
It is to be seen if US investors will take Article 102 of the Treaty on the Functioning of the European Union (TFEU) and Article 54 of the EEA Agreement prohibiting abuse of a dominant position serious.
In any case, I opened a CFD short position in Qualcomm $QCOM today at not particularly lucky $67.44.