Apple, Qualcomm settle bitter dispute over iPhone technology


Apple and American microchip manufacturer Qualcomm said Tuesday they have agreed to "dismiss all litigation" against each other worldwide in what had been a sprawling battle over royalty payments.

Apple alleged that Qualcomm engaged in illegal monopolistic patent licensing practices for its premium cellular modem chips for smartphones. As part of their new deal, Apple and Qualcomm have struck a six-year license agreement that includes a two-year option for extending it on top of a multiyear chipset supply agreement. This triggered a series of countersuits, with Qualcomm contending that Apple was some $7bn behind on its royalty payments and that iPhones stuffed with Intel chips infringe on a number of its patents.

The Cupertino company says Qualcomm withheld payments it owed as a means of retaliation for Apple's cooperation with South Korean investigators.

Apple and Qualcomm have settled their patent royalty dispute.

The companies appeared in court on Monday in a trial that was expected to last for four to six weeks in San Diego.

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.

Qualcomm stock was trading at roughly $58 per share before the news broke, and is now trading at nearly $70 per share. Apple is due to report its quarterly results on April 30 while Qualcomm is scheduled to release its numbers on May 1.

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That changed after Qualcomm and Apple revealed their ceasefire.

Previously, Apple had used only Qualcomm's modem chips for its older model iPhones. The new Qualcomm deal is a plot twist on Intel's plan, which could no longer factor in the Apple business opportunity in any significant way.

Apple's biggest rival, Samsung Electronics Co., already has a phone in the market that will support that new technology based on a Qualcomm chip.

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

But with Apple's efforts to launch a 5G version of the iPhone by 2020 reportedly being hampered by Intel missing deadlines for the development of its own XMM 8160 5G modem chip, it has been suggested another firm could enter the fray. Stating that they aim to focus on PC, "Internet of Things" devices, and data focussed devices, however they intend to make components to help improve 5G infrastructure.

The settlement could also have an impact on China's Huawei Technologies Co Ltd, which is also in a licensing dispute with Qualcomm.

The company could make $2 billion annually by taking Intel's market share and regain the dominant position it enjoyed during the rollout of 4G, analysts said.