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

BREAKING: Province approves Surrey police force

Minister of Public Safety Mike Farnworth green lights city’s municipal police force

Report finds some Surrey school district staff expenses ‘not adequately supported’

Auditor General review highlights practices ‘inconsistent’ with policy, such steaks costing $80

PHOTOS: First look at ice installed at new arena in North Surrey

Three-rink arena is scheduled to open on Sept. 3

White Rock’s ‘Grizlee’ sculpture to be replaced

Popular statue was installed 20 years ago in memory of Lee Slavin

Trudeau vows to stand firm against ‘increasingly assertive’ China

China has accused Canada of meddling in its affairs

Two Vancouver police officers bitten, scratched after ‘violent’ arrest

Police will recommend charges against a 50-year-old man

North Delta happenings: week of Aug. 22

Events and community listings for North Delta

B.C. father tells judge he did not kill his young daughters

Andrew Berry pleaded not guilty to the December 2017 deaths

UPDATED: Kelly Ellard gets day parole extended for six more months, overnight leave

Kelly Ellard was convicted of killing 14-year-old Reena Virk in 1997

New study suggests autism overdiagnosed: Canadian expert

Laurent Mottron: ‘Autistic people we test now are less and less different than typical people’

B.C. hockey player excited to join Humboldt Broncos

Defenceman Sebastien Archambault played last two seasons with Junior B Sicamous Eagles.

Huawei executive’s defence team alleges Canadians were ‘agents’ of the FBI

eng’s arrest at Vancouver’s airport has sparked a diplomatic crisis between Canada and China

Most Read