The legal battle between Apple and Qualcomm is coming to an end. Or rather, the two companies have agreed for a settlement. But it comes at a cost that Apple will have to bear. American chipmaker Qualcomm has revealed in its Q2 earnings that it will be receiving $4.5 billion from the Cupertino-based technology giant as a part of the settlement agreement.
The settlement between Apple and Qualcomm was very unexpected, and it was decided upon while the trial between the two companies was going on. Both the technology giants have been involved in a patent dispute for the last few years now, and neither of the two wanted to back out.
However, according to a report in Bloomberg, Apple realised that Intel‘s modems, which the company has been using because of its dispute with Qualcomm, would not be ready in time to use in 5G iPhones. This, in turn, is causing a delay in the launch of a 5G iPhone, in spite of the fact that Apple first observes how a technology is perceived in the market and then comes out with its own version.
This reportedly led Apple to agree to pay a sum between $4.5 to $4.7 billion in order to make up with the American chipmaker. We should also add here that most 5G smartphones that we have or will be seeing this year will come with Qualcomm’s processor.
It is worth pointing out that the amount Apple has paid right now is separate from any royalties the company would have to pay to use Qualcomm chips in its devices in the future.
But paying this amount has got Apple a six-year global patent licensing agreement with the American chipmaker. The technology giant also has an option of extending it for another two years. And most importantly, the company’s legal fight with Qualcomm, which had spread to different parts of the world has come to an end. With this, Apple would again be able to get services from Qualcomm.
As we mentioned earlier, this is extremely critical for Apple, as Intel would not be able to ready 5G chips on time. So the company either has the option of producing its own 5G chips, or simply getting them from Qualcomm.
Speaking on the settlement agreement, Qualcomm CEO Steve Mollenkopf said, “We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer.”
It is worth mentioning that according to a report by CNBC says that Apple’s cash on hand alone is 50 times the amount it had to pay to Qualcomm — $225.4 billion to be precise. Apple is also the first ever company to cross the valuation of $1 trillion. So, you can do the maths and find out how much $4.5 billion means to the Cupertino-based technology giant.
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