Patent settlement with Apple nets Qualcomm a cool $4.5 billion (or more)
Apple and Qualcomm ended their two-year legal battle abruptly last month with a surprise settlement, but for how much has been the million-dollar question on everyone's mind. Thanks to Qualcomm's Q2 earnings published this week, we now have an approximate number: $4.5 billion to $4.7 billion, not counting future royalties for Apple's use of their chips.
The dispute started in 2017 when Apple sued Qualcomm over contentions with its patent licensing practices. The chip company's near monopoly on supplying smartphone modems was letting it get away with demanding artificially inflated prices, Apple argued. Qualcomm fired back with patent infringement lawsuits later that year, and the two have been trading blows for feels like an eternity since.
A Wall Street Journal report states that Apple decided to make amends once the company determined one of Qualcomm's few competitors in the 5G modem market, Intel, couldn't meet its demands in time for a 5G iPhone. The left Apple with essentially two choices: start manufacturing the chips in-house, or make nice with Qualcomm, an ironic development given the accusations of monopolistic practices that kicked off the entire dispute. With this settlement, Apple secures a six-year global patent licensing agreement with Qualcomm with the possibility of extending it an additional two years.
Qualcomm's stock price rose more than 20% to a total market cap of $85 billion immediately following the settlement. Apple's stock prices, though, experienced a slight dip before going up by barely 1%. As for Intel, the company plans to complete "an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices" going forward.
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