Qualcomm Inc slashed its current-quarter profit and revenue forecasts on Friday, amid an escalating legal battle between the chipmaker and Apple Inc.
Apple said it had decided to withhold royalty payments to its contract manufacturers until the dispute is resolved in court.
The payments made by Apple to its contract manufacturers are, in turn, owed by the contractors to Qualcomm in royalties, according to the chipmaker’s licensing business model.
The iPhone maker sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.
Qualcomm, the largest maker of chips used in smartphones, is a major supplier to Apple and Samsung Electronics Co Ltd for modem chips that connect phones to wireless networks. The two companies together accounted for 40 percent of Qualcomm’s revenue in its latest fiscal year.
