Apple paid an estimate of $6 billion to settle its ongoing legal battle with Qualcomm, according to estimates shared today by UBS analyst Timothy Arcuri.
The payment, of about $ 6 billion, would have been for the royalty rights that Apple had stopped paying during its two-year legal conflict with Qualcomm.
Qualcomm may also receive between $8 and $9 for iPhone in current patent royalties, a figure based on the guide numbers provided by Qualcomm following the transaction. Qualcomm said it expects its earnings per share to rise by $2.
It seems that Apple has had no choice but to reach an agreement with Qualcomm, as it had no other way to get 5G chips for its iPhone 2020 line. Initially, Apple had planned to use Intel chips, but according to some Intel, rumors would have achieved development goals, causing tensions between the two companies.
A few hours after Apple and Qualcomm announced an agreement, Intel said it would exit the 5G smartphone modem business and never make 5G smartphone chips.
It is not entirely clear whether Apple resolved with Qualcomm because it knew of Intel’s plan to abandon the development of 5G chips or if Intel made the decision after learning about Apple’s settlement plans, but in any case, leave Apple with the choice to take Qualcomm chips for future iPhones.
Smartphone manufacturers like Samsung will have 5G smartphones available this year so Apple could not afford to delay the launch of its iPhone 5G. The launch in 2020 already puts Apple back compared to other manufacturers, even if the 5G networks of US carriers are still under development.
Following the news of the transaction, Qualcomm’s shares rose by over 38%, marking a great victory for the San Diego company. The agreement includes a six-year license agreement with a “multi-year chipset supply agreement”.
It seems that Apple will need to rely on Qualcomm for the foreseeable future, but the Cupertino company is working on its modem chip technology, which could eventually allow it to abandon Qualcomm as a modem chip provider.