Qualcomm Chip Lawsuit: The Supply Chain Implications
A class action lawsuit involving technology supplier Qualcomm and its customers, Apple and Samsung, is under way in the UK, with implications for supply chain pricing and licensing agreements.
The consumer advocacy group Which? is leading the case at the Competition Appeal Tribunal in London, seeking US$620m in damages over allegations of anti-competitive practices.
The legal challenge centres on claims that Qualcomm, a US-based chip manufacturer, abused a dominant market position to overcharge for its patented technology.
Which? contends that these inflated costs were subsequently passed down the supply chain to manufacturers and ultimately to consumers.
The lawsuit covers Apple and Samsung smartphones sold in the UK between October 2015 and January 2024.
If successful, nearly 29 million UK consumers could receive compensation, with an average payout of £17 per device.
The trial, expected to last for five weeks, will first focus on determining if Qualcomm held a dominant position and if it abused that power through licensing deals.
Questioning supply chain licensing models
Which? alleges that Qualcomm’s business practices involved charging excessive licensing fees for its smartphone chips.
The consumer group argues that, because of Qualcomm's strong market position, smartphone manufacturers had little choice but to accept the terms, with the additional expense being incorporated into the final retail price of their devices.
Qualcomm has not offered a comment on the current trial but has previously refuted the claims. When the lawsuit was first initiated in 2021, it described the case as having "no basis".
The outcome of this trial could set a precedent for how component costs are passed through the technology supply chain and scrutinise the licensing models that underpin it.
The protracted nature of competition litigation
The legal process has been lengthy, highlighting the complexities of large-scale competition lawsuits.
Lisa Webb, a Senior Lawyer at Which?, commented on the timeline to the BBC: "We filed this claim back in 2021, so this first trial being now in 2025 – it's obviously a bit of a slog."
The current proceedings are only the first phase of the case, focused on establishing liability.
Should the tribunal rule in favour of Which?, a second stage will be required to calculate the exact amount of compensation due to consumers.
The case is structured as an 'opt-out' claim meaning eligible consumers are automatically included without needing to take action.
"But the real benefit of this system is that as a consumer, you don't need to do anything... if we win, we will get you your money," Lisa added.
Global scrutiny and industry precedent
Qualcomm's business practices have previously drawn attention from regulatory bodies in several countries.
The company has been fined by the European Union for antitrust violations and a similar case is proceeding through the Canadian courts.
In a separate action, the US Federal Trade Commission sued Qualcomm in 2017 for what it described as unfair technology licensing practices, although that case was dismissed in 2020, highlighting the difficulty in proving anti-competitive behaviour.
Anabel Hoult, CEO of Which?, adds: "This trial is a major moment. It shows how the power of consumers – backed by Which? – can be used to hold the biggest companies to account if they abuse their dominant position."
The tribunal’s decision could have a lasting impact on competition law within the smartphone supply chain, particularly concerning how licensing arrangements are structured and how costs are ultimately passed on to the end consumer.
