Qualcomm To Gain $4.5B+ From Apple Settlement
Component giant, Qualcomm, intends to retrieve over US$4.5 billion from its settlement with Apple, after ceasing their long-running dispute over licensing and exclusivity.
The tech giants announced their ‘truce’ in mid April, agreeing upon a one-time payment, plus six-year licensing deal for Apple to buy Qualcomm chips.
Disclosed in Qualcomm’s Q2 earnings report, the chip manufacturer flags “estimated revenues” of US$4.5 billion to US$4.7 billion derived from the Apple settlement, excluded from Non-GAAP results.
“While we continue to assess the accounting impacts of the agreements, our financial guidance for the third quarter of fiscal 2019 includes estimated revenues of $4.5 billion to $4.7 billion resulting from the settlement (which will be excluded from our Non-GAAP results), consisting of a payment from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities. ”
Commentators claim Apple was enticed to mend fences with Qualcomm, amid a lack of viable vendors to produce 5G smartphone modems for forthcoming iPhones.
Whilst Intel was positioned as an alternate vendor, concerns mounted over its ability to have components ready by 2020.
Intel has since announced its exit from the 5G smartphone modem market, following Apple and Qualcomm’s truce.
Since the deal’s announcement in mid-April, shares in Qualcomm have soared over 43%.
Overall, Qualcomm has remained tight lipped regarding further details about its deal with Apple.
“Well, a deal like this, there’s a lot of value back and forth, and it’s just best to keep it confidential,” said Qualcomm CEO, Steve Mollenkopf, to CNBC.
“We’re glad to put the litigation behind us and all the litigation around the world has been dismissed and settled,” said Apple Chief, Tim Cook.
“We’re very happy to have a multi-year supply agreement and we’re happy that we have a direct license arrangement with Qualcomm that was important for both companies.”