Apple & Qualcomm bury hatchet in royalties battle royale
San Francisco: Apple and American microchip manufacturer Qualcomm said Tuesday they have agreed to "dismiss all litigation" against each other worldwide in what had been a sprawling battle over royalty payments. The last-minute settlement cut short a courtroom clash between the tech giants just as it was getting underway in California. For two years, the companies had fought a multi-front brawl that could have required Qualcomm to pay billions.
The news sent Qualcomm's stock price soaring more than 23 percent on Wall Street, its best one-day performance in nearly 20 years. The deal includes a six-year license agreement with the option to extend for two years, and a payment to Qualcomm from Apple, the companies said.
At the heart of the battle were the royalties Qualcomm charges for its patented chips, which enable smartphones to connect to mobile networks.
Apple accused Qualcomm, which holds the most patents for chips, of taking advantage of its dominant position to charge exorbitant amounts for its chips or access to its patents.
Qualcomm denied the allegations and accused Apple of abusing its position and of taking legal action to negotiate prices down. "I believe both Apple and Qualcomm got deeper into this than they wanted to," analyst Patrick Moorhead of Moor Insights & Strategy said in a statement.
"This settlement should be good for the wireless industry as companies should feel free to invest in research, get paid a fair price for those inventions, and consumers take advantage of those innovations at a very rapid pace."
Several hours after the deal was announced, Intel said it was withdrawing from the 5G smartphone modem business, without indicating whether its decision was a cause or consequence of the agreement its rival signed with Apple.