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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Route 26 reinstated from Skidegate to Alliford Bay

B.C. Ferries service will begin later in January

On the Wing: Christmas bird count reports, part 1

Haida Gwaii’s bird count report for Port Clements and Rose Spit

Queen Charlotte housing assessment jumps 31 per cent

Port Clements and Masset also see increases, according to B.C. Assessment

Pipeline at centre of B.C. conflict is creating jobs for First Nations: chief

All 20 elected band councils along the Coastal GasLink pipeline route have signed benefits agreements

Power saving measures in effect on Haida Gwaii

B.C. Hydro asks residents to conserve electricity to avoid outages during cold weather

Kids across Canada more at risk of hospitalization from flu this season: doctor

Dr. Theresa Tam said influenza B does not usually peak until February or later

Closed mills, housing surge support a positive forecast for lumber industries

B.C. lumber producers have closed mills accounting for 18% of province’s capacity, RBC report says

Good Samaritan pays part of rent for B.C. woman facing eviction in can-collecting dispute

Zora Hlevnjak, 76, supplements her pension by collecting cans and receiving public donations

Kelowna’s ‘Baby Mary’ finds biological parents after more than 30 years

Geneologist and DNA test helped her connect with her biological parents

Kelowna hotel to award couples for baby-making with Nooner deal

The deal includes a free stay every Valentine’s Day for the next 18 years

‘Scariest boat ride of my life’: Passengers trapped by ice on rocky B.C. ferry sailing

The Nimpkish docked in Bella Coola on Jan.12 coated in a thick layer of ice

B.C. pair ordered to pay $55,000 for oil tank discovered four years after selling home

Judge says defendants breached contract, despite being unaware of tank until basement flooded

Canada to give $25,000 to families of each Canadian who died in Iran plane crash

Prime Minister Justin Trudeau also made it clear that Canada still expects Iran to compensate victims

Oil and gas industry applauds top court’s dismissal of B.C.’s Trans Mountain case

The high court’s ruling Thursday removes one of the remaining obstacles for the project

Most Read