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In the Matter of
Intel Corporation (“Intel”) respectfully submits this statement in response to the Commission’s
Notice of Request for Statements on the Public Interest. 83 Fed. Reg. 54,138 (Oct. 26, 2018).
Administrative Law Judge (“ALJ”) Pender correctly concluded that an exclusion order would be against
the public interest under the unique circumstances of this Investigation. (ID at 114, 194.)
Qualcomm’s requested relief, here and in the co-pending 1093 Investigation, targets Intel,
Qualcomm’s only competitor in the open or “merchant” market for premium baseband chipsets, the type
of high-performance chipsets used in cutting-edge smartphones such as the iPhone. Qualcomm’s requested
Intel’s exit would be particularly damaging because the world is on the cusp of a transition to the
next generation of wireless technology—from fourth generation (4G) to fifth generation (5G). That
transition will be powered by premium baseband chipsets for smartphones, the focal point of 5G innovation.
5G will dramatically increase the speed, breadth, and volume of data that can be transmitted over cellular
networks, enabling new industries and fostering economic growth, but also presenting risks as increasing
numbers of sensitive applications rely on cellular networks. Indeed, ALJ Pender correctly found that an
exclusion order poses “tangible national security implications to the United States.” (ID at 115.)
The United States has the distinction of being home to the only two merchant-market suppliers of
premium baseband chipsets, both of which are driving 5G innovation. An exclusion order that eliminated
Intel’s chipsets from the market would put at risk U.S. leadership and economic competitiveness in this
critical technology. Given these unique circumstances, the Commission’s exercise of its public interest
discretion is warranted and would not, contrary to Qualcomm’s suggestion, immunize Apple from an
exclusion order in “any” case. This is not just any case: it is one in which Qualcomm seeks to use Section
337 to eliminate its sole rival in a crucial market with implications for national security and competitiveness.
Between 2012 and September 2015, Qualcomm’s annual share of the worldwide premium LTE
modem market exceeded 80 percent. FTC v. Qualcomm Inc., No. 5:17-cv-220, 2017 WL 2774406, at *4
(N.D. Cal. June 26, 2017) (“FTC”). Throughout that period, several would-be competitors closed their
PUBLIC VERSION
baseband chipset businesses. Intel is Qualcomm’s only competitor left in the merchant market for sales of
premium baseband chipsets. If an exclusion order issues, causing Intel to exit and restoring Qualcomm’s
monopoly position, the well-known benefits of competition—lower prices, richer innovation, and higher
These concerns are not just hypothetical. Qualcomm has been the subject of investigations around
the globe for its anticompetitive baseband chipset sales and patent licensing practices, resulting in billions
of dollars in fines by competition authorities in the European Union, China, Korea, and Taiwan. The U.S.
Federal Trade Commission sued Qualcomm for engaging in a web of anticompetitive practices through
which Qualcomm raises the cost of using competitors’ chipsets. Through a practice known as “no license
no chips,” Qualcomm refuses to sell its baseband chipsets to smartphone original equipment manufacturers
(“OEMs”) (such as Apple) unless they agree to license Qualcomm’s patent portfolio at unusually high
royalty rates, which are then imposed on all phones using competitors’ chipsets. FTC at *5-6. Qualcomm
long held a dominant position in premium and CDMA chipsets, meaning OEMs such as Apple had no
choice but to purchase at least some chipsets from Qualcomm. Id. at *3-6. Qualcomm also conditioned
billions of dollars of discounts of its high royalty rates on Apple’s exclusive use of Qualcomm baseband
chipsets. Id. at *6-7. If Apple used a non-Qualcomm chipset, Apple would be required to refund past
discount payments. Id. The FTC found that Qualcomm’s conditional discounts resulted in below-cost
pricing. Complaint ¶ 125(c), FTC v. Qualcomm Inc., No. 5:17-cv-220 (N.D. Cal. Jan. 17, 2017). These
arrangements foreclosed rivals such as Intel from competing for Apple’s business. FTC at *23-25.
Only recently has Intel been able to break into the premium baseband chipset market, supplying to
Apple after Apple’s obligations to buy only from Qualcomm ended. Qualcomm’s ITC complaint targeting
Intel is an attempt to restore its dominant position in the baseband chipset market through a new means.
II. An Exclusion Order Would Nearly Certainly Cause Intel to Exit the Premium Baseband
Chipset Market.
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. It would be impossible for Intel to sit on the sidelines for 4G and re-emerge successfully
. (RX-8C
III. An Exclusion Order Would Harm the Public Interest by Undermining U.S. Leadership in
5G, Resulting in Harm to U.S. Economic Competitiveness and National Security.
ALJ Pender concluded that “5G is crucial to U.S. national security and competitiveness in the
national economy and thus Intel’s exit would harm the national interests of the United States.” (ID at 193.)
Intel’s exit and the resulting harm to 5G innovation would also negatively impact U.S. consumers, the
public health and welfare, and domestic production of baseband chipsets. (ID at 193-94.)
5G implicates national security because it represents a revolutionary increase in the speed and
volume of data being transmitted for increasingly sensitive applications, such as electrical grids, hospitals,
cars, machine-to-machine communications, and drones. As Apple’s economic expert Dr. Jeffrey Eisenach
explained, digital technology is shifting from a means of communication to a mechanism of control and,
consequently, it is critical to have secure U.S. suppliers of 5G cellular technology “to protect the private
and public entities that will depend on 5G connectivity, and to ensure they can use that connectivity without
sensitive information being compromised and without private and public functions being disrupted.” (RX-
1612C [Eisenach] at Q.22; see also Tr. [Eisenach] at 1268:5-21; Tr. [Evans] at 1089:13-17.) Foreign
countries understand the economic and security implications, and thus are intensely competing to lead the
world in 5G and are poised to fill any void left by a weakening of U.S. leadership. (Tr. [Evans] at 1088:16-
1089:5.) The Committee on Foreign Investment in the United States (“CFIUS”) found that “[g]iven well-
known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a
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shift to Chinese dominance in 5G would have substantial negative security consequences for the United
States.” (CX-1929 [CFIUS Letter] at 2-3.) President Trump recently stated that “America’s national
security depends on technological excellence” and “it is imperative that America be first in [5G] wireless
technologies.”2 ALJ Pender thus properly described national security as a matter of “pre-eminent
importance” in this Investigation and found a “real and palpable likelihood the National Security interests
U.S. leadership in 5G is also important for the U.S. economy because 5G will foster new
applications thanks to “improvements in the speed, reliability, and efficiency of mobile wireless networks.”
(RX-8C [Evans] at Q.80.) 5G promises to contribute hundreds of billions of dollars in U.S. economic
growth and millions of new jobs—growth that could be undermined if Intel’s 5G presence is diminished.
The pace and scope of 5G innovation in the United States would suffer without Intel’s innovations.
(Tr. [Evans] at 1087:5-1088:12; RX-9C [Bowers] at Q.78.) Intel is a key 5G baseband chipset innovator
and has made significant contributions to 5G standard setting, as well as early development and testing of
5G technology. For example, Intel developed the groundbreaking 5G Mobile Trial Platform, which enables
5G network field testing by simulating the performance of a 5G baseband chipset. (RX-9C [Bowers] at
Q.29-38.) Intel also offers a distinct perspective on 5G innovation because of the singular breadth of its
experience in technologies relevant to 5G through its “end-to-end” approach, encompassing work across
the cloud, the core network, the access network, wireless technology, and the baseband chipset. If Intel
exits the baseband chipset market, not only would the country lose the benefits Intel brings, but Qualcomm
also would have less incentive to innovate at its current pace. (RX-11C [Scott Morton] at Q.166.)
Intel submits that ALJ Pender was correct that “[t]he National Security issues inherent with 5G are
too serious to risk” (ID at 195), particularly where Qualcomm has an “adequate remedy at law for any
patent infringement by Apple” by seeking damages in ongoing district court litigation. (ID at 194.)
2
“Presidential Memorandum on Developing a Sustainable Spectrum Strategy for America’s Future” (Oct.
25, 2018), https://tinyurl.com/ya7mfmon.
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William G. McElwain
Nina S. Tallon
Michael D. Esch
WILMER CUTLER PICKERING
HALE AND DORR LLP
1875 Pennsylvania Avenue, NW
Washington, DC 20006
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
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UNITED STATES INTERNATIONAL TRADE COMMISSION
WASHINGTON, DC
Before the Honorable Thomas B. Pender
Administrative Law Judge
CERTIFICATE OF SERVICE
I, Lanta M. Chase, hereby certify that on November 8, 2018, copies of the foregoing,
INTEL CORP.’S STATEMENT ON THE PUBLIC INTEREST (PUBLIC VERSION), were filed
and served on the following as indicated: