Apple, Qualcomm settle bitter dispute over iPhone technology

The deal requires Apple to pay Qualcomm an undisclosed amount

In this Jan. 9, 2019, file photo a sign advertises 5G at the Qualcomm booth at CES International in Las Vegas. Apple and mobile chip maker Qualcomm have settled a bitter financial dispute centered on some of the technology that enables iPhones to connect to the internet. The surprise truce announced Tuesday, April 16, came just as the former allies turned antagonists were facing off in a federal court trial that was supposed to unfold over the next month in San Diego. The resolution abruptly ended that trial. (AP Photo/John Locher, File)

Apple and mobile chip maker Qualcomm have settled a bitter financial dispute centred on some of the technology that enables iPhones to connect to the internet.

The surprise truce announced Tuesday came just as the former allies turned antagonists were facing off in a federal court trial that was supposed to unfold over the next month in San Diego. The resolution abruptly ended that trial, which also involved Apple’s key iPhone suppliers.

READ MORE: iPhone sales are falling, and Apple’s app fees might be next

The deal requires Apple to pay Qualcomm an undisclosed amount. It also includes a six-year licensing agreement that likely involves recurring payments to the mobile chip maker.

Investors reacted as if it were a resounding victory for Qualcomm. The San Diego company’s stock soared 23% to close Tuesday at $70.45. Apple shares edged up 2 cents to $199.25.

Neither Apple nor Qualcomm would comment beyond a brief statement announcing they had resolved their differences. Details about how much Apple and its iPhone suppliers will be paying Qualcomm could emerge in court documents or when the companies announce their latest financial results. Apple is due to report its quarterly results on April 30 while Qualcomm is scheduled to release its numbers on May 1.

Apple had been seeking at least $1 billion for money that Qualcomm was supposed to rebate as part of an earlier licensing agreement. Apple had begun to have misgivings about that deal as it added more features to its increasingly popular line-up of iPhones.

Qualcomm was seeking $7 billion for unpaid royalties it contended it was owed for its patented technology in the iPhone. Apple’s iPhone suppliers, including Foxconn and Pegatron, wanted another $27 billion from Qualcomm.

The dispute was clearly beginning to hurt all parties involved, motivating them to settle, said technology industry analyst Patrick Moorhead of Moor Insights & Strategy.

“Both Apple and Qualcomm got deeper into this than they wanted to,” Moorhead said.

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.” Two of Apple’s biggest rivals, Samsung and Huawei, are already getting ready to introduce 5G models. The iPhone would have been at a disadvantage if it didn’t have a pipeline to Qualcomm’s chips.

Falling behind the competition isn’t something Apple can afford with its iPhone sales already falling .

“Ultimately, Apple realized this was more about two kids fighting in the sandbox and they have bigger issues ahead with 5G and iPhone softness versus battling Qualcomm in court,” Wedbush Securities analyst Daniel Ives wrote in Tuesday research note.

Apple had already lost an earlier battle with Qualcomm last month when a federal court jury in San Diego decided the iPhone maker owed Qualcomm $31 million for infringing on three of its patents.

Qualcomm still faces other potential fallout from its demands to be paid royalties in addition to the fees it charges for its mobile chips. The Federal Trade Commission has accused the company of using its royalty system to stifle competition in the mobile chip market in another case in which Apple played a central role.

A trial about the FTC’s lawsuit wrapped up in a San Jose, California, court in January, but the judge still hasn’t issued a ruling.

Michael Liedtke, The Associated Press

Like us on Facebook and follow us on Twitter

Just Posted

Kelowna man speaks up for limb loss awareness after losing leg

Ralph Zaiser is getting used to life as a recent amputee

Okanagan College names new fundraising director

Helen Jackman will join the college as executive director of the Okanagan College Foundation and director of advancement

Kelowna baby store shops for Mamas for Mamas

Baby & Me donated more than $10,000 worth of supplies to the charity

43 Okanagan College students enter studies with help of government

The B.C. Government’s Provincial Tuition Waiver Program allows young students who were in care access education

VIDEO: Driver in bizarre hit-and-run at B.C. car dealership turns herself in

Police believe alcohol was a factor in incident causing estimated $15,000 in damages

Allegedly intoxicated man arrested after 3 paramedics attacked at Kamloops hospital

Paramedics had transported the man to Royal Inlands Hospital for medical treatment

B.C., Ottawa talk 50/50 split on abandoned bus-route service

B.C. has paid $2 million on a bus service for the northern part of the province

‘B.C. cannot wait for action’: Top doctor urges province to decriminalize illicit drugs

Dr. Bonnie Henry says current approach in ‘war on drugs’ has criminalized and stigmatized drug users

B.C. woman, 76, challenges alcohol-screening laws after failing to give breath sample

Norma McLeod was unable to provide a sample because of her medical conditions

New report on 2017 wildfires calls for better coordination with B.C. First Nations

Tsilhqot’in National Government documents 2017 disaster and lists 33 calls to action

Shuswap woman asks that people stop swiping daffodils from memorial bed

Cynthia Bentley honours memory of those lost to cancer by planting 100 daffodils each year

Okanagan experience for the Blue Man Group

The world tour of the Blue Man Group came to Penticton this week for two shows.

Most Read