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Raimond Spekking via Wikimedia Commons

Qualcomm acknowledged Wednesday that some of Apple's suppliers have started to withhold royalty payments amid its legal dispute between the iPhone maker. Qualcomm said it is widening its earnings guidance for the current quarter amid uncertainty over how much the suppliers will pay next quarter.

For now, Qualcomm says its revenue wasn't hit as the suppliers withheld the same amount — around $1 billion — that Qualcomm has chosen not to pay Apple, for which Apple has also sued. However, Qualcomm said it isn't clear how much, if at all, Apple suppliers will underpay this quarter.

Why it matters: Even as the two companies are locked in a bitter legal battle, they both still depend on one another. Apple is one of Qualcomm's largest customers, while Apple relies on Qualcomm exclusively for the modem chips used in iPhones for Sprint and Verizon.

Investors unfazed: In after-hours trading, Qualcomm shares were trading up nearly 3 percent, to $54.10.

Here's what Qualcomm had to say in the guidance that accompanied its earnings report:

Apple's contract manufacturers reported, but underpaid, royalties in Q2'FY17. However, our revenues were not negatively impacted as the contract manufacturers acknowledged the amounts are due and the underpayment was equal to the amounts that Qualcomm has not paid Apple under our Cooperation Agreement (that expired Dec 31, 2016) that are currently in dispute.It is unclear whether Apple's contract manufacturers will underpay royalties owed under their contracts with us in Q3'FY17. Our guidance range for fiscal Q3 EPS is wider than our typical practice primarily due to this uncertainty. We have considered a variety of scenarios within this range, but have not included a scenario where no payment is made by the contract manufacturers.

Go deeper

1 hour ago - World

Biden freezes U.S. arms deals with Saudi Arabia and UAE

Trump struck several large arms deals with Mohammed bin Salman (L) and Saudi Arabia. Photo: Kevin Dietsch-Pool/Getty Images

The Biden administration has put on hold two big arms deals with Saudi Arabia and the United Arab Emirates which were approved in the final weeks of the Trump administration, a State Department official tells Axios.

Why it matters: The sales of F-35 jets and attack drones to the UAE and a large supply of munitions to Saudi Arabia will be paused pending a review. That signals a major policy shift from the Trump era, and may herald sharp tensions with both Gulf countries.

Dan Primack, author of Pro Rata
2 hours ago - Podcasts

Robert Downey Jr. launches VC funds to help save the planet

Robert Downey Jr. on Wednesday announced the launch of two venture capital funds focused on startups in the sustainability sector, the latest evolution of a project he launched two years ago called Footprint Coalition.

Between the lines: This is a bit of life imitating art, as Downey Jr. spent 11 films portraying a character who sought to save the planet (or, in some cases, the universe).

DHS warns of "heightened threat" because of domestic extremism

Supporters of former President Trump protest inside the U.S. Capitol on Jan. 6. Photo: Roberto Schmidt/AFP via Getty Images

The Department of Homeland Security on Wednesday issued an advisory warning of a "heightened threat environment" in the U.S. because of "ideologically-motivated violent extremists."

Why it matters: DHS believes the threat of violence will persist for "weeks" following President Biden's inauguration. The extremists include those who opposed the presidential transition, people spurred by "grievances fueled by false narratives" and "anger over COVID-19 restrictions ... and police use of force[.]"

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