Qualcomm's Shares Jump 23% After Settling Feud With Apple

Qualcomm's Shares Jump 23% After Settling Feud With Apple

Apple announced the deal in a press release on Tuesday shortly after the fight went to court in San Diego.

Given that Apple is now Intel's only customer for 4G LTE smartphone modems, and the company is already reportedly behind schedule with its first-generation 5G modem, the news of the Qualcomm settlement was probably just too much for Chipzilla to bear.

The deal includes a six-year license agreement with the option to extend for two years, and a payment to Qualcomm from Apple, the companies said. This means that the pair will stop any further litigation (as far as this particular matter is concerned).

The news came as a San Diego court heard arguments in a case involving the two companies' patent dispute.

Neither Apple nor Qualcomm released statements illuminating why the settlement occurred so abruptly, however, according to Nikkei, Apple was growing concerned about Intel's ability to supply next year's iPhone models with 5G modems.

The news yesterday that the massive, multi-billion dollar legal fight between Apple and chip maker Qualcomm has come to an end has big-time ramifications for Apple - and for the rest of us who use smartphones every day (heck, nearly every minute of every day).

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Shares of Qualcomm soared after the news of the settlement was broken by CNBC's David Faber. This has been capped at $400 by Qualcomm, but still represents a much higher value than the $20 cost of a Snapdragon modem chip. Furthermore, it shows how hamstrung Apple was without Qualcomm: Its agreement with Intel to supply mobile chipsets, especially for modems, has been a disaster.

The complicated legal battle, centered around modem chips and related disputes, has been raging in courts around the world for the past two years, including an earlier trial between Qualcomm and the U.S. Federal Trade Commission. Qualcomm countersued Apple for failing to paying royalties and for working with Intel.

Qualcomm counter sued, then Apple returned the favor.

As a result of this legal wrangling, Apple resorted to exclusively using communications chips from Intel.

Apple started using Qualcomm's chips, which allow the iPhone to connect to cellular networks, in 2011. For example, in one case, Qualcomm asked a United States federal judge to ban the sale of iPhones.

A year later, Apple had switched to making its phones with Intel chips and filed a suit against Qualcomm asking for that $1 billion and a lower royalty rate. As for now, the company has announced 1000+ Apple engineers are working on a custom 5G modem.