Qualcomm, Apple agree to settlement, reach new license deal

Sheri Evans
April 17, 2019

This unexpected news sparks life into rumors about whether Apples 2020 iPhones would indeed feature 5G modems built by Qualcomm or Intels as initially planned.

The news sent Qualcomm's stock price soaring more than 23 percent on Wall Street, its best one-day performance in almost 20 years.

Given that Apple is now Intel's only customer for 4G LTE smartphone modems, and the company is already reportedly behind schedule with its first-generation 5G modem, the news of the Qualcomm settlement was probably just too much for Chipzilla to bear.

Finally, the U.S. FTC case against Qualcomm that makes numerous same claims of anticompetitive behavior remains unresolved, with a decision expected at any time. Adding this sort of new connectivity means Qualcomm working WITH Apple to design their next-generation chip - which is a different situation (in a few different ways) from what goes on with Android smartphone makers. Without Qualcomm chips, it would likely take Apple significantly longer to bring 5G to future iPhones, putting it behind other smartphone manufacturers.

Apple and Qualcomm have ended their contentious legal battle over microchip royalties with a surprise agreement to drop all litigation worldwide.

On one side, Apple said Qualcomm was abusing its market position and charging exorbitantly high rates for its technology.

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Apple also claimed that Qualcomm has withheld around $1 billion in rebates it was supposed to pay Apple as reimbursement for the patent royalties.

The biggest victor of this settlement is Qualcomm. Apple is due to report its quarterly results on April 30 while Qualcomm is scheduled to release its numbers on May 1. Qualcomm was seeking over $7 billion in unpaid royalties from Apple and its supplier, as well as other damages totaling billions of dollars.

Apple and Qualcomm were involved in a series of lawsuits throughout the world, including one in San Diego in which Apple was ordered to pay Qualcomm $31.6 million for violating patents for Internet connection, shifting web traffic and graphics processing, and battery life.

Shares of Intel were up 2.7 percent at $58.25 in after hours trade. But now that Apple and Qualcomm are once again able to work together, Intel can expect Qualcomm to supply at least some of the 5G chips in the 2020 iPhone-and Apple would have had more leverage to negotiate better pricing.

Based on the decision in the FTC suit, Apple was assumed to have the edge in its case. The rumors also indicated that Intel's 5G tech wasn't going to be enough for Apple and that Apple's own 5G chip might not be ready in time for the first-gen iPhone 5G model.

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