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Apple Inc. (NASDAQ:AAPL)’s Dispute With QUALCOMM, Inc. (NASDAQ:QCOM) Putting It At A Disadvantage Against Rivals

The dispute between Apple Inc. (NASDAQ:AAPL) and chipmaker QUALCOMM, Inc. (NASDAQ:QCOM) might in the end be disadvantageous to the iPhone maker since it will give its rivals an edge. This is because Apple is using Intel modem chips in some its new iPhones and Qualcomm chips in others.

In those iPhones that the Cupertino, California-based tech giant is using Qualcomm’s chips, it is disabling the features which give these chips an edge over the ones provided by Intel. This is with the objective of maintaining consistency in performance among all the devices.

$1 billion lawsuit

Traditionally the world’s biggest corporation by market capitalization has preferred not to be reliant on one component supplier. This makes it highly unlikely that it would choose Qualcomm as its sole supplier of modem chips and this even gets more complicated with the ongoing dispute between the two firms.

The dispute between the two took a legal turn when earlier in the year Apple filed a $1 billion lawsuit accusing Qualcomm of unfair pricing practices and illegal market monopoly. Qualcomm also retaliated by lodging a complaint with the International Trade Commission asking for the body to ban the importation of iPhones into the United States on the basis that they had infringed on patents.

EVDO/CDMA standard

One reason why Apple might have chosen to use modem chips manufactured by Qualcomm on some of its iPhones is because these chips are the only ones that are compatible with the EVDO/CDMA networks of Sprint and Verizon.

“Intel’s baseband does not currently support CDMA — therefore the GSM versions of iPhone still won’t work on CDMA networks such as Verizon, Sprint, at Japanese carriers, or at China Telecom,” said Chris Caso an analyst at Raymond James.

However, Intel is expected to dismantle Qualcomm’s monopoly with regards to modem chips that work on the EVDO/CDMA networks as it is launching a modem chip, the XMM 7560, which will be compatible with the standard. This modem chip is not expected to be ready for iPhones until next year though.

On Wednesday shares of Apple Inc fell by 0.86% to close the day at $158.28.

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