Royalty row: Apple, Qualcomm bury the hatchet

San Francisco, April 17 

Apple and American microchip manufacturer Qualcomm said yesterday 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% on Wall Street, its best one-day performance in nearly 20 years.

The deal includes a six-year licence 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. 

“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.

Apple had argued that Qualcomm’s royalty demands meant it was effectively insisting on payment for innovations by Apple — such as touch ID or Apple Pay — that Qualcomm “had nothing to do with.” Apple said it had been overcharged by billions as a result and, following its initial US lawsuit, the iPhone maker filed two more suits in China on the same basis. Qualcomm counter-sued. — AFP

Last-minute settlement

  • 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% on the Wall Street, its best single-day performance in nearly 20 years
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