WASHINGTON (Reuters) – The Federal Trade Commission said on Monday it would not ask the U.S. Supreme Court to review its appeals court loss against Qualcomm Inc, which the agency had accused of breaking antitrust law in selling chips for smartphones.
In October, the U.S. 9th Circuit Court of Appeals said it would not rehear arguments over whether the San Diego, California-based company had engaged in anticompetitive patent-licensing practices to keep a monopoly on the market for modem chips that connect smart phones to wireless data networks. A three-judge panel on that court had ruled in August that the FTC failed to prove its case.
In a statement, Acting FTC Chairwoman Rebecca Slaughter noted “significant headwinds facing the Commission in this matter” in deciding to not petition the Supreme Court.
“I continue to believe that the district court’s conclusion that Qualcomm violated the antitrust laws was entirely correct and that the court of appeals erred in concluding otherwise,” she added.
Representatives for Qualcomm did not immediately respond to a request for comment.
Qualcomm Inc on Tuesday released a new chip for connecting devices to 5G networks that it hopes will be adopted for home internet use and inside businesses as a competitor to WiFi.
The San Diego chip designer is the biggest supplier of modem chips that connect smart phones and other consumer electronics to cellular data networks. Qualcomm is aiming to take advantage of the faster speeds possible with 5G network technology to expand its footprint in other markets.
The newest chip, called the X65 modem, is Qualcomm’s fourth generation of 5G modem but the first capable of hitting peak download speeds of up to 10 gigabits per second, about 10 times faster than peaks on previous LTE networks and comparable to fiber broadband services.
A major focus for the new chip will be commercial and industrial applications, such as connecting computers and equipment scattered across corporate campuses directly to cloud computing services when a traditional WiFi network would not be feasible.
Another will be fixed-wireless internet installations, where 5G gear replaces a traditional wire-based home or business broadband internet service.
Cristiano Amon, who will take over as Qualcomm’s chief executive in June, said the networks could offer a faster option for people who live in neighborhoods where fiber-optic internet service is not available.
“We now have the technology in place to start thinking about all those services beyond phones,” Amon told reporters.
Amon said the X65 modem will be used in 40 different product designs for fixed-wireless gear from telecommunications carriers that will start hitting markets in the second half of 2021.
Fixed-wireless sales will be reported in the company’s “internet of things” revenue in the company’s financial results, Amon said. Revenue from those chips grew 48% to $1 billion during Qualcomm’s fiscal first quarter reported last week.
Qualcomm Inc on Wednesday forecast fiscal second-quarter sales and profits above Wall Street expectations, driven by a wave of phone buyers around the world upgrading their devices for 5G network connectivity.
The San Diego, California-based chip designer forecast sales with a midpoint of $7.6 billion and adjusted profit at a midpoint of $1.65 per share, compared with estimates of $7.10 billion and $1.57 per share, according to IBES data from Refinitiv.
Qualcomm is the world’s biggest supplier of chips that help mobile phones connect to cellular data networks, providing chips to Apple Inc and other handset makers. But the company is also building out businesses supplying chips to automakers such as General Motors Inc, which last week disclosed a deal to source chips from Qualcomm, and challenging Intel Corp with new processors for laptop and desktop computers.
Two of the company’s newer business lines – radio frequency chips to help devices handle newer 5G signals and internet-of-things chips for devices such as wireless headphones – have now become billion-dollar-per-quarter businesses.
Cristiano Amon, the company’s president who will take over as chief executive in June, said that the company expects chip supplies to remain tight until the second half of the year but that demand was outstripping supply as rivals of Huawei Technologies Co Ltd’s, which largely did not use Qualcomm’s chips, moved in to take the Chinese brand’s market share after a U.S. blacklisting last year.
“We’re seeing growth of share in a preeminent high tier,” Amon said.
Steve Mollenkopf, Qualcomm’s current chief executive, added: “If we could make more, we could sell it.”
Qualcomm forecast a midpoint of $6.25 billion in revenue for its chip business in the fiscal second quarter, beating estimates of $5.62 billion, according to data from FactSet. Qualcomm forecast a midpoint of sales for its licensing business, which has higher margins than its chip business and generates much of its profit, of $1.35 billion, lower than estimates of $1.43 billion, according to FactSet.
The higher sales of chips – and chips with better margins – accounted for the company’s above-expectations profit forecast despite falling short of estimates for its licensing business, Akash Palkhiwala, Qualcomm’s chief financial officer, told Reuters.
“There’s a mix shift that’s happening within our business,” he said.
For the fiscal first quarter ended Dec. 27, Qualcomm said sales and adjusted profit were $8.24 billion and $2.17 per share, compared with analyst estimates of $8.27 billion and $2.10 per share, according to Refinitiv data. Chip and licensing revenue were $6.53 billion and $1.66 billion, respectively, compared with estimates of $6.51 billion and $1.72 billion, according to FactSet data.
Qualcomm said first-quarter sales for handset chips were $4.22 billion, jumping 79% from a year before on the strength of 5G phone upgrades. Sales of radio frequency chips, a growth area for Qualcomm, increased 157% to $1.06 billion. Automotive chips sales were $212 million, up 44% from the previous year.