Qualcomm and Apple drops all litigation; Intel exits 5G smartphone modem business

Apple chief executive Tim Cook

"The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020", Intel said in a statement late Tuesday. The companies did not say how much the payment will be.

Qualcomm's shares gained $13.27 to close at $70.45 in regular trading, marking the stock's best day since 1999.

Apple had been seeking at least $1 billion for money that Qualcomm was supposed to rebate as part of an earlier licensing agreement. Jacob Kastrenakes from The Verge comments that had Apple won the battle, it could've secured lower prices for Qualcomm's chips and made it easier for Qualcomm competitors.

Ben Wood, chief of research at CCS Insight said the settlement was "a huge vindication for Qualcomm". This means that Apple is not dependent on Qualcomm's modem chips.

Apple and Qualcomm squared off in a San Deigo courtroom yesterday in what many thought would be a protracted trial. Qualcomm demanded $7 billion in royalties while Apple asked for $27 billion in compensation for unfair business practices. But Qualcomm stopped making this payment after Apple spoke out against it during a hearing held by the South Korea Fair Trade Commission. Qualcomm sued Apple for royalties the company's suppliers were refusing to pay, claiming Apple had interfered with contracts Qualcomm had with companies such as Foxconn. It also announced a multi-year chipset supply agreement.

Meanwhile, by the end of 2018, Qualcomm had secured a ban on the sale of certain iPhones in China and Germany - again for patent violations - but Apple may still appeal. The amount of the payment was not disclosed.

In November, Qualcomm CEO Steve Mollenkopf said that he believed that the two companies were on the "doorstep" to settling.

Huawei, also the world's biggest telecoms equipment maker, said on Tuesday the number of contracts it has won to provide 5G telecoms gear increased further, in defiance of a USA campaign to squeeze the Chinese maker out of worldwide markets on security grounds. So the Cupertino-based company should select one (or more) suppliers for the 5G-enabled iPhone.

Because Qualcomm is already shipping 5G chips while Intel was still developing them, the deal helps Apple in its battle with Samsung Electronics Co Ltd and other manufacturers whose phones already work on the faster networks.

Effective immediately, all litigation between the two companies has been dropped, and the two have signed new patent license and chip supply agreements.

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