Managed to find longer snippet from the Bernstein Analyst report (the full report is pay-to-read). It explains how Apple manages to pay so less fees to Qualcomm than other manufacturers. Nice little loophole they found instead of outright stealing.

Apple uses its manufacturer as middleman (Foxconn). Foxconn pays the license fee to Qualcomm using the price it uses to charge Apple. Apple then buys iPhone from Foxconn and sells it at full price.


According to Sacconaghi, this reflects the fact that the company itself is not a Qualcomm licensee - its buys baseband chips from Infineon - while using a licensed contract manufacturer - Foxconn - to make 100% of its handsets. Sacconaghi explains that Foxconn pays QCOM its standard royalty based on the transfer price to Apple. By contast, he says, essentially all other handset vendors are Qualcomm licensees and pay royalties based on the wholesale price of their phones.

http://siliconinvestor.advfn.com/rea...msgid=26112706