Qualcomm stock rose more than 20% on the news, while Apple stock was flat. The rumor has been that Intel might not have a 5G modem ready for 2020, which would be a significant feature loss compared with its competitors.
The Trump administration is said to be interested in settling to support Qualcomm as a counter-balance to Chinese rivals. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.
Apple has been aggressively hiring RF engineers in San Diego, where Qualcomm is located. Both sides were asking for billions in damages. Qualcomm, in turn, is seeking billions of dollars in unpaid royalties from Apple's Asian contractors that assemble its iPhones and iPads.
Today is a day few of us thought would ever come: Apple and Qualcomm have called a truce and ceased all litigation against each other around the world.
For years, Apple bought modem chips from Qualcomm, but it chafed under Qualcomm's prices and requirement that any company using its chips would also pay licensing fees for its patents. The agreement includes a further 2-year extension option, which if Apple eventually chooses to exercise it, would take the agreement through April of 2027. Apple's iPhone suppliers, including Foxconn and Pegatron, wanted another $27 billion from Qualcomm. The amount of the payment was not disclosed. While the judge has yet to rule, she has already said that Qualcomm would have to license its patents to other chipmakers-something it had previously declined to do.
Now that the dust has settled, Apple can start testing a 5G-enabled iPhone with Qualcomm's latest and faster modems. "We are very excited about the opportunity in 5G and the "cloudification" of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns", said Intel CEO Bob Swan. Qualcomm is one of the top suppliers of chips that can connect to 5G networks.
Effective immediately, all litigation between the two companies has been dropped, and the two have signed new patent license and chip supply agreements.
Perhaps now that Apple is well on its way to developing and manufacturing its own chipsets, it wont rely on Qualcomm as much as it had in the past.