The tech giants Apple and Qualcomm avoided extending an already gruelling three-continent legal battle by settling their years-long disputes on Tuesday. Intel will also continue to invest in its 5G network infrastructure business.
As part of the surprise settlement, Apple has entered into a six-year supply agreement with Qualcomm with an option for another two. Qualcomm contended that Apple owed it money for royalty payments related to its technology while Apple said the company was trying to try an unfair rate for essential technology.
Apple and Qualcomm have settled their patent royalty dispute.
Proceedings between the two companies began Monday in federal court in San Diego.
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"I believe both Apple and Qualcomm got deeper into this than they wanted to", analyst Patrick Moorhead of Moor Insights & Strategy said in a statement.
Qualcomm stock rose over 15% on the news of the settlement. The announcement comes on the same day Apple announced a wide-ranging settlement with Qualcomm over patent issues. As a result, Apple's attorney might be able to convince a jury that Qualcomm is not entitled to royalties based on the price of a complete smartphone. Following initial lawsuits, Apple had to rely exclusively on Intel to provide LTE modems for iPhones, thus eliminating its reliance on Qualcomm, until now, it seems.
Intel will also be assessing the market for 4G/5G opportunities in the Internet of Things space, PCs, and other data-oriented devices. Which goes to show just how big of a deal this is in terms of sales and volume, and how important it was for Qualcomm to bring Apple back on board.
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Neither Apple nor Qualcomm released statements illuminating why the settlement occurred so abruptly, however, according to Nikkei, Apple was growing concerned about Intel's ability to supply next year's iPhone models with 5G modems. Apple later stopped paying license fees to Qualcomm and completely stopped using its chips in iPhones in 2018.
Qualcomm is still waiting for a federal judge's ruling on claims by the U.S. Federal Trade Commission that the company's licensing practices are anti-competitive. Now that Apple will be standardizing on Qualcomm modems going forward, Intel's hopes of growing (or even maintaining) its mobile modem business were effectively reduced to zero. At the same time, Apple also started cooperating with regulators in Korea who were looking into Qualcomm's royalty practices.
Intel did not immediately respond to Reuters request for comment.
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