Blame chip cos for costly phones

With each year, smartphone makers are breaking every psychological barrier as they continue to hike their prices to new levels. As a result, even customers are rethinking and second guessing their decision to upgrade their smartphones that provide a miniscule difference in power or design.

The US Federal Trade Commission too think that customers are paying a fortune for their smartphones. But, they aren’t willing to blame the smartphone makers such as Apple or Samsung rather it has Qualcomm, which holds several patents in wireless communication, in its scanner for the high price of smartphones.

Qualcomm charges companies like Apple a set percentage of the total price of a phone in exchange for the right to use its technology, according to the antitrust suit filed by the FTC.

While the percentage varies, both Apple, which has been in patent suit battles with Qualcomm across the world, and Huawei, which is contesting for a rival 5G technology, argue that the Qualcomm demands a large cut of each phone sale or it threatens to cut off their supply of important technologies that is quite common in smartphones.

Qualcomm, in its pretrial brief, had argued that it doesn’t factor the price of its intellectual property into its chips, which is why it charges a separate patent royalty. It went on add that the policy dates back decades when it wasn’t a market leader.

Qualcomm also said its market share has declined in the past year as new competitors like Intel, MediaTek, and Samsung have gained ground in the wireless chip business.

In 2017, the FTC had sued Qualcomm for antitrust violations, but the case only reached trial this week. However, It’s unclear if prices will drop if the FTC wins or if phone makers would simply pocket any savings. But if it loses, Qualcomm may need to rethink its business model, which depends heavily on patent licenses.