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Qualcomm sues four Apple contract manufacturers

[May 17, 2017] (Reuters) - Qualcomm Inc said on Wednesday it filed a complaint against Foxconn Technology Group and three other contract manufacturers of Apple Inc for not paying royalties.

The other manufacturers listed by Qualcomm were Pegatron Corp, Wistron Corp and Compal Electronics Inc.

The iPhone maker sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court.

"While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay," the chipmaker said in a statement.

Qualcomm said it sought an order that would require the manufacturers to comply with their long-standing contractual obligations to the company, as well as declaratory relief and damages.

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A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, U.S. April 18, 2017. REUTERS/Mike Blake

The chipmaker slashed its current-quarter profit and revenue forecasts in April, saying it excluded revenue receivable from those contract manufacturers.

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.

Foxconn Technology Group is the trading name of Taiwan's Hon Hai Precision Industry Co, the main assembler of Apple devices.

Qualcomm filed the complaint in the United States District Court for the Southern District of California.

The company's shares were marginally lower at $55.49 in premarket trading.

(Reporting by Narottam Medhora and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

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