BREAKING NEWS: Apple Cut Deal With Qualcomm Legal Case Dropped
Hours after a jury had been sworn in, in what was tipped as a major battle of two tech titans, Apple and Qualcomm have cut a deal, agreeing to dismiss all legal action between the two.
The deal means that Qualcomm’s modem chips are likely to be used again in Apple’s newest iPhone models. The iPhone used to rely entirely on Qualcomm’s chips, but from 2016 Apple started using rival Intel’s modem chips in some models.
Shares in Qualcomm surged 23% after the announcement, while Apple’s climbed just 0.13%
And in what looked like becoming an incredibly messy corporate divorce has been peacefully resolved for one principle reason: these companies really need each other.
Qualcomm simply must retain its relationship with Apple if both Companies are set to grow.
And Apple, if it wants to hold onto that prized position, needs to make sure it has the best components for the job.
Analysts said not using Qualcomm would hinder Apple’s ability to create a market-leading 5G iPhone.
The big loser of the day, is Intel. With the Apple-Qualcomm row in full swing, Apple had started using Intel’s components instead – but with Qualcomm apparently now back on good terms, that could well change which will be a welcome move for PC makers.
Apple’s legal challenge of Qualcomm terms had left it without access to Qualcomm’s market-leading 5G modem chips, putting its most important product, the iPhone, a step behind Android competitors in the race to the next big advance in wireless.
Huawei was pitching to supply Apple with 5G technology.
The move ends a long running legal battle that was starting to get ‘dirty’ over how royalties are collected on Qualcomm technology found in Apple iPhones.
Qualcomm executives even suspected Apple of supporting a hostile takeover bid by Broadcom an Asian Company. Apple executives were also angered that Qualcomm hired an opposition-research firm with ties to a news outlet that published articles calling the iPhone maker Silicon Valley’s biggest bully which several other suppliers supported.
Financial terms of the agreement weren’t disclosed.
In a press release, Apple and Qualcomm said they reached a six-year license agreement, effective from April 1, and added that the settlement includes a one-time payment from Apple to Qualcomm.
The two-year feud started as global smartphone sales slowed, pressuring both companies’ businesses.
Apple had paid Qualcomm $7.50 in royalties on every iPhone it sold since 2007—a price the parties reached with complex agreements that lowered Qualcomm’s standard royalty rate through rebate and incentive payments.
Apple also agreed to make Qualcomm the exclusive provider of modem chips for iPhones from 2011 to 2016.
The Wall Street Journal reported that Apple added chips from Intel to some iPhone models in 2016, as its most recent contract with Qualcomm concluded. It then slapped Qualcomm with a lawsuit in January 2017.
Earlier in the day Apple had accused Qualcomm of forcing customers to pay twice to gain access to its chips, as trial arguments got under way.