The iPhone maker Apple and the chip maker Qualcomm have recently settled their long-running intellectual-property quarrel over cellular technologies, which includes a payment from the former to the latter, and we now have our first look at the size of the legal agreement.
Scott Rosenberg and Ina Fried, reporting for Axios:
In its quarterly earnings released today, Qualcomm said it would record $4.5-$4.7 billion revenue in the coming quarter as part of its settlement of a long-running intellectual-property quarrel with Apple. The revenue ‘includes a cash payment from Apple and the release of related liabilities,’ Qualcomm said.
That’s quite a settlement, almost as much as Qualcomm’s entire $4.9 billion revenue for the March quarter. As part of the legal settlement, Apple and Qualcomm have agreed to drop all litigation and enter a six-year licensing agreement, effective as of the beginning of April 2019.
Apple stopped sending royalty payments to Qualcomm almost two years ago and while specific financial terms are unknown, it’s safe to assume that a multi-billion dollar payment from Apple to Qualcomm is for those unpaid royalties, among other things.
The legal settlement deal, according to the companies, “reflects value and strength of Qualcomm’s intellectual property.” In my opinion, paying $4.5 billion to Qualcomm to end the legal war it started with the chip maker in the first place makes Apple a loser and Qualcomm a winner in this case.
The next iPhone will almost certainly use Intel’s slower modems because the settlement came too late in the design process for Qualcomm’s chips to be used in new iPhone models Apple will be releasing in September. The company is expected to release a Qualcomm-powered iPhone that could connect to 5G networks, but that won’t happen before 2020.