Chip makers (Qualcomm and Intel, for instance) and Smart Phone manufacturers (Apple and Samsung, for
instance) belong to two oligopoly markets. However, these markets are connected because smart phones
cannot work without chips. In 2017 we have seen a complex battle over patents and how much license
fees should be between Apple and Qualcomm, the largest players in each market. They were fighting with
lawsuits in the US, UK and China. Apple ended the litigation with Qualcomm in 2019 and agreed to buy Qualcomm Snapdragon chips because Intel-Apple were not able to develop 5G chips, Samsung and Wawei already have it, and Apple found itself cornered without 5G chips.
However, the discussion of licence fee models is still relevant. Read this Reuters’ article from 2017 about
the license fee model supported by Qualcomm, Nokia and Ericsson, and the license fee model that Apple,
Google, Mercedes, and VW would like to have:
1. Show with an example how these two license fee models are different.
2. As a consumer of final products and not chips, what model favors you? Why?