Qualcomm and Apple Settle Long-Running Patent Royalty Dispute

Doris Richards
April 17, 2019

It looks as though the other shoe has dropped with followings Apple's surprise settlement with Qualcomm over patent licensing fees (as we predicted). At the same time, Qualcomm discovered that Apple was planning on using Intel's modem chips on some of the iPhone 7 models.

The settlement includes a payment from Apple to Qualcomm as well as a chipset supply agreement, suggesting that Apple will buy Qualcomm chips for future iPhones.

"Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide", an Apple announcement reads. Further, the settlement agreement "includes a payment from Apple to Qualcomm", though a specific figure was not disclosed.

Apple and Qualcomm have kicked off their billion dollar antitrust trial in San Diego.

Following Tuesday's announcement, Qualcomm stock jumped 23 percent, closing at $70.45. This has been capped at $400 by Qualcomm, but still represents a much higher value than the $20 cost of a Snapdragon modem chip.

In recent weeks, there have been a lot of rumors that Huawei may become a potential modem supplier for Apple's first generation 5G iPhone.

A US Federal Trade Commission lawsuit against Qualcomm over alleged anti-competitive tactics concluded in January, though a decision has yet to be announced.

China's Huawei Technologies said on Tuesday it has not held talks with Apple Inc about supplying 5G chipsets, a day after its founder said it was open to selling such chips to the US firm which has yet to unveil dates for a next-gen iPhone. Qualcomm countered that Apple reneged on its contracts. The rumor has been that Intel might not have a 5G modem ready for 2020, which would be a significant feature loss compared with its competitors. Apple chief Tim Cook and Qualcomm's CEO Steve Mollenkopf are both expected to appear during the trial, which is set to last around a month.

Apple had been seeking at least $1 billion for money that Qualcomm was supposed to rebate as part of an earlier licensing agreement.

Per the agreement, Apple will pay Qualcomm for a six-year license agreement.

As a result of this legal wrangling, Apple resorted to exclusively using communications chips from Intel.

For two-years the companies had fought a multi-front brawl that could have required Qualcomm to pay billions. With the Apple-Qualcomm row in full swing, Apple had started using Intel's components instead - but with Qualcomm apparently now back on good terms, that could well change.

Apple accuses Qualcomm, which holds the most patents for chips, of taking advantage of its dominant position to charge exorbitant amounts for its chips or access to its patents.

Other reports by Iphone Fresh

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