Apple and Qualcomm have settled their patent royalty dispute. The two companies have agreed on a patent licensing schedule and have agreed to drop all ongoing litigation against each other.
From the joint press release:
The settlement includes a payment from Apple to Qualcomm. The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement.
Apple uses a number of Qualcomm cellular technologies in the iPhone. The two companies have been at odds since Apple ordered its suppliers to stop paying patent royalty fees to Qualcomm in 2017. Qualcomm owns a number of patents governing the way cell-phone modems connect to cellular network infrastructure, among other things.
Qualcomm stock was trading at roughly $58 per share before the news broke, and is now trading at almost $70 per share. Apple stock rose slightly on the news but has fallen to near its previous level.
The news came as a San Diego court heard arguments in a case involving the two companies’ patent dispute. The case was expected to last until May. Among other things, Apple alleged that Qualcomm said it would not supply modems for the iPhone unless Apple agreed to pay higher licensing fees for a number of other patents.
Qualcomm CEO Steve Mollenkopf said in November that his company and Apple were close to reaching an agreement in the patent dispute. Apple denied that any such discussions were under way.
The dispute between Apple and Qualcomm had gotten personal, sources say. But in the end it was business considerations that won out. Fast Company reported that Apple’s current modem supplier, Intel, is having difficulties staying on schedule to produce the modem chips that will go in Apple’s next generation of iPhones. Intel supplied some of the modems for the iPhone 7, and all iPhone modems in 2018.
CNBC was the first to report the settlement, with confirmation from Apple and Qualcomm coming shortly afterward Tuesday.