Chip war ends in Apple-Qualcomm deal

Viva Tung  CNET

Viva Tung CNET

Companies including MediaTek, Samsung, and even Huawei were rumored to have been in negotiations with Apple for 5G chips, just as Qualcomm's CEO said that Apple still has their number if they want to do business. This was reflected in the market as the company's stocks jumped up 23 percent after the settlement news broke out. It's Qualcomm's best day since 1999. Apple, on the other hand, saw a small dip before going up by barely 1%.

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.

The legal war between Apple and Qualcomm is finally over. Both sides were asking for billions in damages.

The complicated legal battle, centered around modem chips and related disputes, has been raging in courts around the world for the past two years, including an earlier trial between Qualcomm and the U.S. Federal Trade Commission. The two companies have agreed on a patent licensing schedule and have agreed to drop all ongoing litigation against each other.

It seems that Apple will be making a one-time payment to Qualcomm to cover any IP use since Apple cut off payments to Qualcomm in 2017. The amount of the payment was not disclosed. Qualcomm was out of the question because of the long-running licencing battle between the two companies.

CNBC was the first to report the settlement, with confirmation from Apple and Qualcomm coming shortly afterward Tuesday.

This fight forced Apple to use Intel modems for last year's iPhone models - the iPhone Xs, the iPhone Xs Max, and the iPhone Xr. Apple claimed Qualcomm abused its position as the primary supplier of cellular chips and was overcharging for chips, using anti-competitive and monopolistic practices. So the Cupertino-based company should select one (or more) suppliers for the 5G-enabled iPhone.

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.

"Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide", the statement read. This has been capped at $400 by Qualcomm, but still represents a much higher value than the $20 cost of a Snapdragon modem chip.

Apple had been seeking at least $1 billion while Qualcomm was seeking $7 billion for unpaid royalties it contended it was owed for its patented technology in the iPhone.

Qualcomm Inc. shares rose $4.25 (+6.03%) in after-hours trading Tuesday.

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