Qualcomm Files Patent Lawsuits Seeking iPhone Sales Ban in China - Page 2

"There' a risk that Apple won't be able to manufacture them" in Chinese plants that produce nearly all of Apple's global supply, said Olds.

For Qualcomm, Apple's move earlier this year to cut off its $2 billion in annual licensing payments cut that money right off of Qualcomm's bottom line, dropping its earnings and hurting its position with investors and the marketplace, Olds added.

"Think about Apple in China—that's been an uneasy relationship at best," he said. "This is the real thing, this is blood sport now."

So, can the two companies resolve their differences and work together again?

 "They're going to have to find a way one way or another if Apple wants to continue to sell iPhones, unless that can get around Qualcomm's patents," said Olds. "They're going to have to license the technology or find a work around. The stuff that Qualcomm is licensing to them is not impossible to engineer around, but it would probably be pretty hard. Otherwise Apple would have already done it."

Charles King, principal analyst with Pund-IT, said he sees the latest Qualcomm action as the company "trying to exert pressure for a settlement" in Apple's most critical market. Though Apple may initially brush off the implications of the Qualcomm lawsuits, "if Qualcomm is successful in its petition, especially if a ruling comes quickly, Apple might find new flexibility" in its negotiation position said King.

"Suffering a sales ban in China just as its newest, latest and greatest iPhones are coming to market would be awkward at best for Apple and probably more financially injurious than settling with Qualcomm," King said.

Lynette Luna, an analyst with GlobalData, agrees. "These types of actions are usually designed to get companies back to negotiating with them," she said. "Apple will not risk losing any distribution in China. If it sees things going the wrong way for the company, it will certainly engage with Qualcomm."

Rob Enderle, principal analyst at Enderle Group, said he sees Qualcomm's new lawsuits as a signal the company is "taking the restrictions off [the continuing battle] and is willing to fight as long and hard as Apple is [willing to fight]. This dramatically improves the chance that Qualcomm will prevail, or at least force Apple to the table."

Jan Dawson, chief analyst at Jackdaw Research, said the situation is complicated in China because the Chinese have "previously taken action against Qualcomm over antitrust issues, so it may not be inclined to side with it in this case," even though the company has been working to improve its relationship with the government there. "Obviously, if Qualcomm were to succeed, this would be a big blow to Apple, but I'm skeptical that it will."