In a surprise move, Qualcomm and Apple settled their long-running disputes over patent licensing, inking a six-year deal and agreeing to end all litigation between them.
As part of the settlement, Apple also signed a multi-year chipset supply contract and agreed to make a one-time payment to Qualcomm for an undisclosed sum.
The patent licensing agreement, effective from 1 April, offers Apple an optional two-year extension.
Apple and Qualcomm made the announcement as they prepared to square off in court today (16 April) in a battle related to the former’s $1 billion lawsuit against the chipmaker.
However, that showdown is now off as the arrangement puts to rest all worldwide litigation between the pair, including claims involving Apple’s contract manufacturers.
In a note to investors, Qualcomm said the move will contribute to “increased stability” for its licensing business.
Winners and losers
Jack Gold, president and principal analyst at J. Gold Associates, told Mobile World Live the news came as a shock to many, but called it “the right thing” for both companies.
He said the deal represents a clear win for Qualcomm, which will get a licensing agreement and a lump sum from Apple. But the iPhone maker will also benefit by gaining access to 5G chips faster than it would have by teaming up with Qualcomm’s competitors.
“Most of the major phone makers are going to have 5G phones this year…Apple was not. They’re having trouble keeping market share as it is, so they really needed to move on that.”
Gold noted there are also clear losers in the announcement, among them Intel, which was tipped to become Apple’s 5G chip supplier with Qualcomm out of the picture. Reports indicated Apple and Intel had an increasingly strained relationship, and Gold said it is “unlikely” Apple will turn to Qualcomm’s rival for 5G chips now.
The analyst added the deal also puts other phone vendors on notice: now that Apple has access to Qualcomm’s 5G technology, it may not be long before its handsets catch up to the likes of Samsung and Huawei’s next generation offerings.