In 2005, Apple contacted Qualcomm as a potential supplier for modem chips in the first iPhone. Qualcomm’s response was unusual: a letter demanding that Apple sign a patent licensing agreement before Qualcomm would even consider supplying chips.
“I’d spent 20 years in the industry, I had never seen a letter like this,” said Tony Blevins, Apple’s vice president of procurement.
Most suppliers are eager to talk to new customers—especially customers as big and prestigious as Apple. But Qualcomm wasn’t like other suppliers; it enjoyed a dominant position in the market for cellular chips. That gave Qualcomm a lot of leverage, and the company wasn’t afraid to use it.