Sci-tech

Apple and Qualcomm reach unlikely settlement agreement

Apple and Qualcomm reach unlikely settlement agreement

The announcement comes just hours after Apple and Qualcomm struck a surprise settlement in the two companies' ongoing patent infringement and royalties dispute related to Apple's use of Qualcomm modems for the iPhone. This means that the pair will stop any further litigation (as far as this particular matter is concerned). Apple and Qualcomm have both taken turns delivering blows to one another over the last couple of years, and just this past Monday, trial proceedings had begun in San Diego.

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".

As opening statements were beginning in the San Diego federal trial of a long-standing patent dispute, technology giants Apple and Qualcomm announced a worldwide legal settlement Tuesday, along with a six-year licensing agreement. This was reflected in the market as the company's stocks jumped up 23 percent after the settlement news broke out.

Following its initial USA lawsuit, Apple filed two more suits in China on the same basis.

Previously, Apple had used only Qualcomm's modem chips for its older model iPhones. The Federal Trade Commission sued Qualcomm in January 2017 as well, and over the same complicated reason. With iPhone X, both Intel and Qualcomm were the suppliers.

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Meanwhile, Qualcomm's claim to fame is that it essentially pioneered CDMA - a type of wireless communication network-in the 1990s and has since made its bread and butter by charging royalties on its 130,000 patents.

Perhaps now that Apple is well on its way to developing and manufacturing its own chipsets, it wont rely on Qualcomm as much as it had in the past. As for now, the company has announced 1000+ Apple engineers are working on a custom 5G modem. For example, in one case, Qualcomm asked a U.S. federal judge to ban the sale of iPhones.

Qualcomm has an extensive patent portfolio covering numerous technologies used in smartphones and derives a significant amount of its annual revenue through licence payments from phone makers.

"This was a major win for Qualcomm as fears of a loss in the courts was a major overhang on the name with Apple going after this IP issue full steam ahead", Wedbush Securities analyst Dan Ives said. However, if you're an iPhone user, and you want to keep using iPhones, you could have been left out if Apple didn't have access to a steady stream of 5G chips.