Apple to pay $4.5 B to Qualcomm as part of patent settlement

US mobile chipmaker Qualcomm on Wednesday said it expects a windfall of $4.5 billion to $4.7 billion this quarter from its recent settlement with Apple in a royalty battle.

Qualcomm factored the additional revenue into a forecast in its latest earnings release, saying the money would be a payment "from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities." 

The Southern California-based company also factored in revenue expected for new royalties from Apple and the makers of its devices.

Qualcomm reported revenue of $5 billion in the recently ended quarter, while its forecast for the current quarter was from $9.2 billion to $10.2 billion in revenue.

In April, Apple and Qualcomm announced an agreement to "dismiss all litigation" against each other worldwide in what had been a sprawling battle over royalty payments.

The last-minute settlement cut short a courtroom clash between the tech giants just as it was getting underway in California.

For two years, the companies had fought a multi-front brawl that could have required Qualcomm to pay billions.

"We entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties," Qualcomm said in an earnings release on Wednesday.

The chipmaker added that it also entered into a six-year global patent licence agreement with Apple that included an option for Apple to extend the deal for an additional two years.

At the heart of the battle were the royalties Qualcomm charges for its patented chips, which enable smartphones to connect to mobile networks.

Apple accused Qualcomm, which holds the most patents for chips, of taking advantage of its dominant position to charge exorbitant amounts for its chips or access to its patents.

Qualcomm denied the allegations and accused Apple of abusing its position and of taking legal action to negotiate prices down.

Several hours after the deal was announced, Intel said it was withdrawing from the 5G smartphone modem business, without indicating whether its decision was a cause or consequence of the agreement its rival signed with Apple.

The stakes had been especially high for Qualcomm, given that it earns a significant chunk of its revenue from royalties paid by manufacturers for its patented technology.

(Via Agence France Presse)

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