Apple and Qualcomm end legal fight over chipset licensing

Alfred Osborne
April 17, 2019

News of the surprise truce Tuesday sent Qualcomm stock soaring more than 23 percent, to almost $70.50 a share.

The massive Apple-Qualcomm legal spat is now over, as the two companies on Tuesday announced they've chose to settle the matters between them and drop all litigation that involved licensing and intellectual property matters. With iPhone X, both Intel and Qualcomm were the suppliers. Interestingly the word "modem" does not appear once in the press release itself, but from the nature of the two companies' conflict and Apple's own needs, clearly Qualcomm is once again going to be supplying modems for Apple's iPhones and iPads.

Intel says that it will honor existing contracts for 4G chips and is re-assessing "opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices". Apple's iPhone suppliers, including Foxconn and Pegatron, wanted another $27 billion from Qualcomm.

Qualcomm claimed that Apple was committing patent infringement by using Qualcomm's intellectual property related to thousands of patented technologies within iPhones without paying royalties.

If Wednesday's gains hold, Qualcomm would tack on more than $20 billion in market value since announcing the settlement.

The royalty agreement - pertaining to the licensing of Qualcomm patents for use in Apple products - will last for six years, effective April 1, 2019.

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Opening statements will start Tuesday in a San Diego trial over Apple's claims that Qualcomm used its monopoly power as a maker of modem chips for mobile phones to extract excessive patent royalties from phone makers.

Until the past couple of months, rumours making round on the web indicated that Apple is banking on Intel for 5G modem chips for future iPhone handsets.

Shares of Intel were up 2.7 percent at $58.25 in after hours trade.

According to reports, Intel is struggling to deliver a 5G modem within a time frame acceptable to Apple. Either Qualcomm had evidence so strong that Apple didn't think it would win the case, or Apple needed something only Qualcomm could provide.

Qualcomm Inc's surprise settlement of a prolonged legal fight with Apple Inc paves the way for the chipmaker to resolve a similar dispute with China's Huawei Technologies Co Ltd, ahead of the launch of 5G phones, several analysts said. Tuesday's settlement is reportedly a global agreement that will resolve all those cases. Qualcomm demanded $7 billion in royalties while Apple asked for $27 billion in compensation for unfair business practices.

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