Qualcomm gains $4.5B to $4.7B from Apple settlement

The settlement deal between Apple and Qualcomm, previously a secret, will net the chipmaker between $4.5 billion and 4.7 billion, according to regulatory filings issued on Wednesday.

The sum was published in Qualcomm's quarterly earnings. Some earlier analyst estimates put Apple's payments as high as $6 billion plus ongoing royalties.

Until now the companies only identified terms as including "a payment from Apple to Qualcomm," "a multiyear chipset supply agreement," and a six-year licensing agreement with a two-year option to extend.

The deal should allow Qualcomm's 5G modems to appear in 2020 iPhones. Apple was reportedly frustrated with Intel's slow progress on 5G, and in fact Intel announced its departure from 5G modems the same day the settlement was revealed.

While 5G may have been an impetus behind burying lawsuits, on the first and only day of the Apple v. Qualcomm trial, the latter exposed Apple documents showing the iPhone maker had been planning to force royalty payments down for years, using tactics that would "hurt Qualcomm financially" and "put Qualcomm's licensing model at risk." It even deliberately licensed less expensive patents to make Qualcomm's demands seem excessive.

Pursuing the case further may have risked backfiring on Apple, despite widespread criticism of Qualcomm's business practices. The chipmaker has been accused of pressuring chip buyers into signing patent licenses at the same time, and/or at exorbitant rates. Government agencies, such as Europe and South Korea's, have already leveled penalties.

13 Comments

1STnTENDERBITS 460 comments · 8 Years

About 5 years ago

Seems about right. The analysta claimed between $5-$6 billion. QC owed Apple a billion, so a payment of ~$4.5 billion seems on par with the analyst's estimate. Good thing it's over. Now they can get back to the business of doing business.

charles1 91 comments · 10 Years

Does anyone know what Apple would have owed Qualcom by now, under the old license for cellular chips? I doubt Apple would have settled unless it was heavily in their favor. So I figure Apple would have owed something like $12 Billion and settled for about 4.5B.

deegee1948 26 comments · 8 Years

“Mr. Businessman” by Ray Stevens (1968) on Apple Music. Sounds awfully familiar with all these goings on.

mjtomlin 2690 comments · 20 Years

charles1 said:

Does anyone know what Apple would have owed Qualcom by now, under the old license for cellular chips? I doubt Apple would have settled unless it was heavily in their favor. So I figure Apple would have owed something like $12 Billion and settled for about 4.5B.

Probably exactly what they paid. The point of taking them to court was to get future licensing fees down to more reasonable levels. I doubt the settlement favored either company... I would hazard to guess that Apple is still paying a percentage of total cost, but with some kind of cap.

carnegie 1082 comments · 10 Years

charles1 said:

Does anyone know what Apple would have owed Qualcom by now, under the old license for cellular chips? I doubt Apple would have settled unless it was heavily in their favor. So I figure Apple would have owed something like $12 Billion and settled for about 4.5B.

Based on, among other things, what Qualcomm told Judge Curiel last year, it would have been in the ballpark of $8 billion for the 9 quarters that this payment would be for.