Intel Blasts Qualcomm As It Completes Sale Of Smartphone Modem Business To Apple

Intel says it sold most of its smartphone modem business to Apple at a 'multibillion-dollar loss' due to Qualcomm's alleged anti-competitive behavior.

Intel is decrying Qualcomm's alleged anti-competitive business behavior as the chipmaker completed the sale of most of its smartphone modem business to Apple, putting an end to its latest bid to become a big silicon player in the world of iPhones and Android phones.

The Santa Clara, Calif.-based company announced the completion of the $1 billion sale Monday. Last week, however, Intel said it was selling the business to Apple at a "multibillion-dollar loss" and blamed it on Qualcomm's alleged anti-competitive behavior.

[Related: Intel Hires Financial Adviser To Sell Home Connectivity Unit: Report]

Intel made the claim in an amicus brief filed Friday in opposition to Qualcomm's appeal of a federal court ruling in May. That ruling agreed with the Federal Trade Commission, which had brought the lawsuit and accused Qualcomm of anti-competitive behavior. The appeal is being heard in the U.S. Court of Appeals for the Ninth Circuit.

Qualcomm did not respond to a request for comment by press time, but the company has previously rejected the FTC's allegations that it engaged in anti-competitive behavior. The company successfully received a pause in the enforcement of the FTC's ruling after receiving support from the U.S. Department of Justice, which cited support from the Energy Department and Defense Department.

The May ruling against Qualcomm by the U.S. District Court in the Northern District of California said that "Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs and end consumers."

In the amicus brief and in an editorial published on Intel's website, the semiconductor giant used the federal court's ruling as evidence that "Intel suffered the brunt of Qualcomm's anti-competitive behavior." This, the company argued, denied Intel opportunities in the modem market, prevented it from selling to customers and forced the company to "sell at prices artificially skewed by Qualcomm."

"We hope our amicus brief will help in clarifying the full extent of the harm that Qualcomm’s unlawful behavior has caused and will continue to cause if left unchecked," Steven R. Rodgers, executive vice president and general counsel at Intel, wrote in the editorial.

In Intel's announcement of the smartphone modem business sale's completion, the chipmaker noted that it has retained the option to develop modems for PCs, IoT devices and autonomous vehicles. Just last week, the chipmaker said it has partnered with MediaTek to develop 5G laptop modems.

Michael Oh, president and founder of TSP, a Cambridge, Mass.-based solution provider, said he doesn't believe Intel is that far off from how much it lost in competition with Qualcomm.

"Clearly, Intel invested a lot of time and effort into that business," he said.

With the sale of most of Intel's smartphone modem business, one of the major questions moving forward is what Apple could do with the intellectual property to differentiate itself.

"What, in particular, does Apple add to Intel's already significant investment so that they can get rid of Qualcomm altogether?" Oh said.

Oh said Apple's "secret sauce" could be related to power management, but he added it's also possible the company could bring the technology over to future generations of the MacBook. Both paths would continue Apple's trend of increasingly relying on its own chips for devices.

"In my head, if I were Tim Cook, that's the way I'd look at that acquisition," he said.