Qualcomm files breach of contract complaint against Apple's manufacturers

Qualcomm files complaint against Apple manufacturers
Qualcomm files complaint against Apple manufacturers

Qualcomm said on Wednesday it filed a complaint against Foxconn Technology Group and three other contract manufacturers of Apple for not paying royalties.

The other manufacturers listed by Qualcomm were Pegatron Corp., Wistron Corp., and Compal Electronics.

The iPhone maker sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court.

"While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay," the chipmaker said in a statement.

Qualcomm said it sought an order that would require the manufacturers to comply with their long-standing contractual obligations to the company, as well as declaratory relief and damages.

Qualcomm General Counsel Don Rosenberg told CNBC, "We have the rule of law here on our side."

"This has been a strategically designed effort to damage us around the world," he said. "We didn't start this or ask for it, but we will fight back with the tools we have."

The chipmaker slashed its current-quarter profit and revenue forecasts in April, saying it excluded revenue receivable from those contract manufacturers.

Qualcomm, the largest maker of chips used in smartphones, is a major supplier to Apple and Samsung Electronics for modem chips that connect phones to wireless networks.

Foxconn Technology is the trading name of Taiwan's Hon Hai Precision Industry, the main assembler of Apple devices.

Qualcomm filed the complaint in the United States District Court for the Southern District of California.

The company's shares were marginally lower at $55.81 in early trading Wednesday.

CNBC's David Faber contributed to this report.