Apple Paid an Estimated $5-$6 Billion to Settle Qualcomm Dispute, Plus $8-$9 Per iPhone in Royalty Fees

[MacRumors]

Apple likely paid somewhere around $5 to $6 billion to settle its ongoing legal battle with Qualcomm, according to estimates shared today by UBS analyst Timothy Arcuri (via CNBC).

The $5 to $6 billion payment would have been for royalty fees that Apple had stopped paying over the course of its two year legal fight with Qualcomm.

Qualcomm may also be receiving between $8 and $9 per iPhone from Apple in ongoing patent royalties, a figure calculated based on guidance numbers that Qualcomm provided following the settlement. Qualcomm said that it expects its earnings per share to increase by $2.

Apple previously paid $7.50 in royalties, so at $8 to $9 per iPhone, Apple would be shelling out more cash than it did before.

Apple appears to have had no alternative but to settle with Qualcomm, as it had no other way to source 5G chips for its 2020 iPhone lineup. Apple initially planned to use Intel chips, but rumors suggested Intel wasn't meeting development goals, leading to tension between Apple and Intel.

Just hours after Apple and Qualcomm announced a settlement deal, Intel said that it was exiting the 5G smartphone modem business and would not be making 5G smartphone chips at all.

It's not entirely clear if Apple settled with Qualcomm because it knew of Intel's plan to abandon 5G chip development or if Intel made the decision after learning of Apple's settlement plans, but either way, it leaves Apple with no choice but to re-adopt Qualcomm chips for future iPhones.

Smartphone makers like Samsung will have 5G smartphones available starting this year, so Apple could not afford to delay the rollout of its 5G iPhones. Launching in 2020 already puts Apple somewhat behind, but 5G networks from U.S. carriers are still very much in development.

Following news of the settlement, Qualcomm's stock has gone up over 38 percent, marking a big win for the San Diego company. The agreement includes a six-year licensing deal along with a "multiyear chipset supply agreement."

It sounds like Apple will need to rely on Qualcomm for the foreseeable future, but Apple is working on its own modem chip technology, which may eventually allow it to drop Qualcomm as a modem chip supplier.

Article Link: Apple Paid an Estimated $5-$6 Billion to Settle Qualcomm Dispute, Plus $8-$9 Per iPhone in Royalty Fees

 

[max2]

Wow that is expensive.

I guess at least it is over!

 

[atomic.flip]

Fully expect to see a hit to Apple’s stock here.

 

[realtuner]

So, a completely made up number with no basis in fact whatsoever.

 

[linkgx1]

Damn, that's more than the whole Samsung débâcle.

 

[mi7chy]

Apple previously paid $7.50 in royalties, so at $8 to $9 per iPhone, Apple would be shelling out more cash than it did before.

So, it backfired for Apple and they're now worse off for trying to throw another partner under the bus.

 

[SoN1NjA]

Definitely seems like Apple won here ― Apple's lawyers should get a raise

it's a ****ing joke

 

[BvizioN]

I think the years of this “partnership” would be pretty much numbered. Apple is only paying for some more time to develop its own modem.

 

[ryanwarsaw]

Fully expect to see a hit to Apple’s stock here.

Nothing yet so far up strongly since yesterday. Time for Apple to maybe make their own modems in the future. I am sure there is a nice acquisition out there somewhere.

 

[alexandr]

which incredibly is the exact amount apple was going to donate to the notre dame restoration cause!

 

[Andres Cantu]

Fully expect to see a hit to Apple’s stock here.

Normally yes, but the market has been parabolic these since 2019. Qualcomm gained 40% this week, that’s just insane.

 

[PickUrPoison]

Apple had been withholding royalty payments for two years. They sold upwards of half a billion iPhones during that time. It adds up.

 

[I7guy]

So, a completely made up number with no basis in fact whatsoever.

A made up number that just became a “fact”.

 

[ryanwarsaw]

I think the years of this “partnership” would be pretty much numbered. Apple is only paying for some more time to develop its own modem.

Exactly if there is enough money in it there will be the ambition to do so.

 

[GreenPixel]

Fully expect to see a hit to Apple’s stock here.

Agreed. I expected to see a drop even today as people sell on this news, but they are up slightly as I write this. Overall this will definitely effect their next earnings statement or two. I'm not sure how much they re going to spread out this money or if it's all together.

 

[Tiger8]

So the Qualcomm trial did have some merit to it, no way Apple would settle for this much if there wasn't a serious issue there

 

[BootsWalking]

In other words, Charlie Demerjian was right:

"Qualcomm just pummeled Apple over patents and technology because, well, it appears the scales tipped in Qualcomm’s favor. SemiAccurate has been saying that Qualcomm would prevail and since we first started covering this suit and Apple’s tactics, and now they have. If you read our last piece on the suits it was pretty obvious that Apple was in the wrong, allegedly caught red handed, and dug the hole deeper with their petty and vindictive reactions. Qualcomm claims to have multiple emails where Apple gave sensitive trade secrets to a competitor, then refused to allow Qualcomm to exercise their contractual audit rights. While there may be some more evidence not presented publicly, it sure looks like Apple was in the wrong. So rather than fixing their alleged wrongs and making Qualcomm whole, they appear to have withheld legitimate royalty payments and launched a barrage of somewhat specious trade and patent related counter-suits along with lowball press sniping."

https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-apple-into-sumbission/

 

[Degerz]

It sounds like Apple will need to rely on Qualcomm for the foreseeable future, but Apple is working on its own modem chip technology, which may eventually allow it to drop Qualcomm as a modem chip supplier.

Just as I thought, sourcing their own modem by 2021 was simply too optimistic, not that it matters much anymore since the US has an appalling spectrum allocation policy ...

 

[apolloa]

You read the pure click bait title of this story, and in the first few sentences realise it’s nothing more then some random analysts pure ‘guess work’...

Ergo any fighting on this thread will be based on pure total speculative guess work.

 

[realtuner]

So, it backfired for Apple and they're now worse off for trying to throw another partner under the bus.

Only if you believe liars and their made-up numbers.

There's no way Apple would settle by paying MORE than previously. They initiated this case and they had the upper hand. This analyst just caters to the anti-Apple crowd (and the stock market manipulators/stock shorters) by trying to spin this as a Qualcomm win and Apple loss.

 

[NickName99]

If this is true, I’m surprised! The reporting on this seemed to indicate a compromise.

Either way, I expect Apple to be making their own radio chips by the time this 6 year contract is over. They're absolutely crushing the competition with their own CPU designs, so we know they've got the hardware talent.

 

[apolloa]

In other words, Charlie Demerjian was right:

"Qualcomm just pummeled Apple over patents and technology because, well, it appears the scales tipped in Qualcomm’s favor. SemiAccurate has been saying that Qualcomm would prevail and since we first started covering this suit and Apple’s tactics, and now they have. If you read our last piece on the suits it was pretty obvious that Apple was in the wrong, allegedly caught red handed, and dug the hole deeper with their petty and vindictive reactions. Qualcomm claims to have multiple emails where Apple gave sensitive trade secrets to a competitor, then refused to allow Qualcomm to exercise their contractual audit rights. While there may be some more evidence not presented publicly, it sure looks like Apple was in the wrong."

https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-apple-into-sumbission/

Wow, you don’t read that on this site! Maybe I guess they had used evidence, shame it didn’t go through however surely Qualcomm would have continued with the case if they felt they had this evidence and could win?

Although my pure guess work here is, Apple DID steal Qualcomm’s patented designs and DID pass them into Intel, and told them to use them to make a 5G modem, ergo it nearly got to court and Qualcomm shoved those emails under Apples lawyers noses and tells them we will bring your entire reputation down..
Apple has no choice but to pay way over what it was to protect its brand and reputation, and Intel has to suddenly cancel all 5G modem technology so it too avoids being taken to court for stealing patents and have its own brand and reputation rubbished.

But as said pure utter guess work.

 

[BootsWalking]

Cutting-edge cellular chip patents > Rounded-corner phone patents.

 

[ryanwarsaw]

So the Qualcomm trial did have some merit to it, no way Apple would settle for this much if there wasn't a serious issue there

The merits of the trial didn't matter Apple had nowhere else to go if they want to sell phones in 2020. I am not saying that Qualcomm didn't have a gripe or anything like that. I am simply saying it become completely irrelevant.

 

[rgbrock1]

Fully expect to see a hit to Apple’s stock here.

Apple's stock is up today.