Tech giants Apple and Qualcomm co-announced Tuesday that they have agreed to dismiss all litigation between the two companies worldwide, ending 2 years of back-and-forth legal battles.
The companies' joint statement said that their settlement includes a payment from Apple to Qualcomm for a six-year license agreement that went into effect April 1—which includes a two-year option to extend. In return, Qualcomm will continue providing Apple with mobile chips via a multi-year chipset supply agreement as part of the settlement.
The statement didn't elaborate beyond that or state financial terms. In a note to investors Thursday obtained by CNBC, UBS analyst Timothy Arcuri said that Apple likely paid Qualcomm between $5 billion and $6 billion as part of the settlement. UBS also estimated that Apple will now pay Qualcomm between $8 and $9 per iPhone in patent royalties. That would be an increase of the $7.50 per iPhone Apple had been paying Qualcomm until now.
In a note to investors today, obtained by CNBC, UBS analyst Timothy Arcuri said that it is likely Apple paid between $5 billion and $6 billion as part of the settlement. Apple and its suppliers had been withholding royalty payments from Qualcomm, likely valued somewhere over $7 billion according to reports.
Following the release of the announcement, Qualcomm's stock jumped more than 40% by late Wednesday afternoon.
The most recent development between Apple and Qualcomm was when Qualcomm announced March 15 that a jury found Apple's iPhones from its iPhone 7 onward to have infringed upon three different Qualcomm patents. Qualcomm stated that the jury awarded the company $31 million in damages for patent infringement.
The two companies' legal battles began in the fall of 2017 when Apple accused Qualcomm of using their patents for extortion, arguing that Qualcomm was leveraging its market position in mobile chipsets to charge unreasonably high fees to license patent portfolios. Qualcomm responded by accusing Apple of patent infringement, as well as stealing trade secrets and providing them to Intel. Between then and now, Qualcomm won several legal faceoffs in China and Germany that resulted in a ban of older iPhones. This past March, Apple was awarded $1 billion by a U.S. District Court judge regarding royalties on modem chips.
The trial in San Diego was supposed to end the dispute once and for all and seems to have succeeded. That said, while Qualcomm's battle with Apple is over, the company still has to tangle with the Federal Trade Commission who filed suit against Qualcomm concerning possible patent abuse.
Tuesday's statement was released following the two companies' trial in San Diego, CA, which was meant to be a final legal resolution.
Just hours after Apple and Qualcomm's joint statement was released, Intel said it would cease selling smartphone modem chips, citing "no clear path to profitability."
Story updated as of 2:00 p.m. CT on Thursday (4/18)
