Apple, Qualcomm settle royalty litigation, Qualcomm shares soar
FBN’s Liz Claman and Kristina Partsinevelos discuss how Apple and Qualcomm settled their royalty dispute.
Apple and Qualcomm announced Tuesday that the two tech giants, which have been engaged in court battles over chip royalties, reached an agreement to drop all litigation. Financial terms were not disclosed.
As part of the agreement, Qualcomm will receive a payment from Apple, the pair of companies said, sending shares of the chipmaker rocketing more than 20 percent higher shortly after the announcement.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| QCOM | QUALCOMM INC. | 155.46 | +1.19 | +0.77% |
| AAPL | APPLE INC. | 228.52 | -0.48 | -0.21% |
According to the pair of companies, the settlement also includes a six-year license agreement, which went into effect April 1, and a two-year option to extend. Qualcomm will supply parts to Apple for multiple years.
A trial regarding the years-long patent dispute began on Monday. Apple has claimed that the San Diego-based chipmaker was overcharging for patents, using illegal licensing practices to protect an alleged monopoly. Apple began using Intel chips in its products in 2016 before dropping Qualcomm’s chips completely last year. It had previously only used Qualcomm’s products.
Meanwhile, Qualcomm – the world’s largest supplier of mobile chips – had said that Apple withheld royalty payments it deserved for its contributions to Apple's phones. A large portion of Qualcomm's profits are generated through licensing.
The lawsuit began in 2017. The companies had just begun opening statements in court in California when the settlement was announced.
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It is unclear how much Apple will pay to Qualcomm. The former had been seeking $9 billion in alleged overpayments to Qualcomm.
Qualcomm had won a string of court cases regarding patent infringement, which resulted in some of Apple’s iPhone models being banned in places like Germany and China.