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Apr 18, 2019 7:00 PM ET

Qualcomm and Apple long trial battle results in Settlement agreement.


iCrowd Newswire - Apr 18, 2019

Qualcomm and Apple long trial battle results in Settlement agreement.

 

Qualcomm Incorporated is a world leader in 3G and next-generation mobile technologies. Snapdragon is a family of mobile system on a chip (SoC) made by Qualcomm for use in smartphones, tablets, and smartbook device. Qualcomm, a close partner with Samsung, has become dominant in recent years. …Samsung, for its part, manufacturers all of the chips, Qualcomm’s and its own. All of that could change in early 2019, as Samsung is said to be in talks with all phone manufacturers regarding the expansion of its own chip business.

 Apple Computers, Inc. was founded on April 1, 1976, by college dropouts Steve Jobs and Steve Wozniak, who brought to the new company a vision of changing the way people viewed computers. Jobs and Wozniak wanted to make computers small enough for people to have them in their homes or offices.

Apple and Qualcomm are engaged in what will likely be a long and epic legal battle. Apple has disputed Qualcomm’s legal right to charge heightened royalties for use of its tech, while Qualcomm is trying to uphold its requirement that Apple pay a percentage of the iPhone’s revenue in return for the use of Qualcomm patents. As a result, lawsuits from both sides have been filed in multiple countries.

Qualcomm Claims Apple Owes It $7 Billion, Say Reports. Shares of Apple and Qualcomm edged up slightly Monday just days after Qualcomm claims in federal court that Apple owes it $7 billion in royalties, according to Bloomberg.

The dispute had centered around Apple’s use of Qualcomm’s modem chips. Apple argued that Qualcomm’s prices and mandate that companies using its chips also pay licensing fees for its patents was an abuse of its position as a dominant supplier. Qualcomm argued that Apple had withheld payments that were part of its royalty agreement.

Apple and Qualcomm have been battling in court since 2017, but Monday marked the first day of a high-profile jury trial. Qualcomm is being sued separately by the Federal Trade Commission over anti-competitive pricing.

After a long battle, Qualcomm and Apple announced they had settled their royalty dispute Tuesday just as trial proceedings were beginning.

On Tuesday, Qualcomm and Apple announced that they had settled their Loyalty Dispute just as trial proceedings had begun in San Francisco. The deal, which included a payment from Apple and chipset supply agreement.

The settlement likely saved both companies from an extensive legal battle where each side sought billions in damages.

To get a sense of how much Apple was paying in royalties, last 2016 Apple Dales reachs to 215.4 Million and the Estimated Royalty Espense is $1.08 billion. Note that Apple was paying these royalties even before Qualcomm became its exclusive modem supplier in 2011, and it stopped paying the royalties (via reimbursements to contract manufacturers) in 2017. Additionally, hardware modem sales are separate.

Although there were no exact details of how much was the agreed settlement fee on both Party, the terms of the agreement include the dismissal of all litigation between the two companies as well as any pending cases brought by Apple’s global contract manufacturers. Most notably, Apple has agreed to pay Qualcomm a one-time payment of an undisclosed sum as well as royalties going forward. Both companies issued short press releases to announce the agreement, but it’s hard to find much good news in it for Apple. Apple also entered into a six-year license with Qualcomm, including “a two-year option to extend, and a multiyear chipset supply agreement.”

That means future iPhones could and very well may return to using Qualcomm modems, which likely paves the way for a faster route to 5G. While it was never confirmed that Apple had settled on a specific supplier for its first 5G iPhone, Apple currently sources LTE modems in the iPhone XS from Intel. 

Surprisingly Intel said on Tuesday that it’s dropping out of the 5G smartphone market just hours after Qualcomm and Apple announced a six-year licensing agreement as part of a royalty settlement.

The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020.

This results to Qualcomm shares surged 23 percent following the disclosure that Apple will pay the chipmaker as part of a settlement. Intel shares rose about 4 percent to $58.97 in extended trading after the announcement. The company said it will provide additional details about its plans in its earnings report on April 25.

 

 

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