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Billions at stake as Apple vs Qualcomm trial begins

17 April 2019

To settle their legal affairs, Apple will be making a one-time payment to Qualcomm, presumably to cover any IP use since Apple cut off payments to Qualcomm in 2017.

Qualcomm stock rose 23.21 percent on Tuesday while Apple stock remained relatively flat.

Update: As a result of the announcement of the deal between Qualcomm and Apple, Intel has announced that it is exiting the 5G modem market and will focus its 5G efforts on network infrastructure.

"Both Apple and Qualcomm got deeper into this than they wanted to", Moorhead said.

On the other hand, Qualcomm has talked about the settlement of all litigation against Apple in a blog post. Intel still believes that it can complete an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices. That delay would have left Apple without a 5G capable iPhone at a time when competitors are launching devices that can utilise the next-generation cellular broadband standard. Qualcomm hit back with a countersuit accusing Apple of instructing its contractors to withhold royalty payments to Qualcomm - and the litigation snowballed from there.

As part of the settlement Apple will also make a payment to Qualcomm and the two have made a six-year license agreement.

Qualcomm said the arrangements are expected to generate $2 per share in additional earnings, though analysts cautioned it was not clear how much of that was coming from the license deal versus the supply agreement. "The companies also have reached a six-year licence agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement".

As long as the dispute was ongoing, Apple was likely going to have to use chips from Intel, and Intel is reportedly "behind schedule" on producing a 5G chip.

"Apple had been a little concerned whether a sole supplier for modems could affect the company's plan to introduce its first 5G smartphone next year", a person familiar with Apple's plans said. Apple CEO Tim Cook contradicted him shortly after, saying that Apple hasn't been in settlement discussions since the third calendar quarter of 2018.

This brings an abrupt end to the complicated legal battle between the two firms, which began when Apple accused Qualcomm of charging more than it should on patents "for technologies they have nothing to do with."

Apple has been shifting and trying to open up new businesses: its push into content, for example, and one reason for that is that iPhone have been dropping hard.

Billions at stake as Apple vs Qualcomm trial begins