Apple and Qualcomm end legal fight over chipset licensing

Apple and Qualcomm end legal fight over chipset licensing

It looks as though the other shoe has dropped with followings Apple's surprise settlement with Qualcomm over patent licensing fees (as we predicted).

Qualcomm also held another bargaining chip: It makes the modem chips needed for future smartphones to work with the next generation of high-speed wireless networks known as "5G".

In addition, the companies have reached a six-year licensing global patent licensing agreement, effective from April 1, 2019. This means that the pair will stop any further litigation (as far as this particular matter is concerned).

The settlement followed two years of increasingly bitter legal battles between the two companies and came as opening arguments took place at a trial in federal court in San Diego.

Apple and its partners in 2017 claimed that Qualcomm abused its market dominance to charge too much in royalties to use its cellular communications technology.

As part of the settlement, both parties also signed a six-year patent license deal and a supply agreement - which could pave the way for Qualcomm getting its modem chips back in the iPhone.

On Tuesday in a San Diego courthouse, both Apple and Qualcomm have unexpectedly settled all their legal disputes.

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Qualcomm stock was trading at roughly $58 per share before the news broke, and is now trading at nearly $70 per share.

The comments come a day after Reuters reported, citing sources and documents, that the United States will push allies at a meeting in Prague next month to adopt shared security and policy measures that will make it more hard for Huawei to dominate fifth-generation (5G) telecommunications networks.

This unexpected news sparks life into rumors about whether Apples 2020 iPhones would indeed feature 5G modems built by Qualcomm or Intels as initially planned.

On the other hand, Qualcomm has talked about the settlement of all litigation against Apple in a blog post.

"This was a major win for Qualcomm as fears of a loss in the courts was a major overhang on the name with Apple going after this IP issue full steam ahead", Wedbush Securities analyst Dan Ives said.

Qualcomm alleged Apple breached its agreements "for the express objective of inflicting financial harm on Qualcomm and coercing Qualcomm to accept unfair compensation for its IP", according to Qualcomm's trial brief. Qualcomm typically doesn't allow customers to buy their chips unless they license their patent portfolio first.

The battle started two years ago when Apple accused Qualcomm of using their patents for extortion. Apple was barely changed after hours.