What just happened? Apple and Qualcomm have agreed to end all legal battles worldwide. Interestingly the word "modem" does not appear once in the press release itself, but from the nature of the two companies' conflict and Apple's own needs, clearly Qualcomm is once again going to be supplying modems for Apple's iPhones and iPads. This particular court battle was over unpaid royalty rebates, and was taking place in court in San Diego, California.
As part of its settlement, the two companies said that they had reached a six-year license agreement, effective April 1 of this year.
A high-stakes trial between Apple and Qualcomm kicked off yesterday in a San Diego courtroom. Qualcomm stock has exploded upwards on this guidance, rising 20 percent. No matter the cost, at least Apple has made sure that won't be a problem.
The ramifications for the settlement are momentous in light of the impending roll out of 5G and Qualcomm's status as the foremost supplier of 5G modems.
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.
Last year, Qualcomm was granted an injunction to ban the sale of certain iPhone models in China due to the alleged patent violations until Apple released a software update addressing the complaint. Qualcomm hit back with a countersuit accusing Apple of instructing its contractors to withhold royalty payments to Qualcomm - and the litigation snowballed from there.
According to ZDNet's sister site CNET, an Intel spokesperson declined to comment on whether the decision behind Intel's exit occurred before the settlement or was in response to the new agreements between Apple and Qualcomm. This means that Apple is not dependent on Qualcomm's modem chips.
Once Qualcomm stopped paying Apple the $1 billion incentive payment, the latter told its contract manufacturers like Foxconn, Pegatron, Compal and Wistron to stop making royalty payments to Qualcomm; the contract manufacturers usually handle the licensing of parts.
"In order to purchase Qualcomm chips or obtain access to patents pledged to a cellular standard, Qualcomm demands that third parties pay Qualcomm a royalty much greater than the value of Qualcomm's contribution to the standard", Apple argues. While it's no big revelation that Apple's 2019 iPhone lineup will not include support for 5G, there have been rumblings that Intel might struggle to meet 5G modem production at the scale Apple needs.