Apple and Qualcomm have settled their longstanding differences in a settlement that was signed and announced on Tuesday, according to a press release from Apple. The company previously opened a billion dollar lawsuit against the technology manufacturer, Qualcomm, over IP royalty charges. Apple alleges that the royalties being charged are far too high and violate anti-competitive practices that have been set in place for the company. The legal battles began back in 2017, and since Qualcomm currently holds the patented technology for 5G capabilities, Apple was dependent on the settlement in order to move forward with a 5G capable iPhone.
Apple and Qualcomm were set to appear in court in San Diego today over the billion dollar lawsuit that Apple filed against Qualcomm. This lawsuit specifically was over the royalty prices of the Qualcomm chips that were being used in Apple’s iPhone products in recent years. Apple felt that Qualcomm was charging too high of a price for Apple to be able to use the chips. The lawsuit forced Apple to switch to Intel chips inside its mobile phones because of the legal battles.
It wasn’t just the price of the chips that Apple was having to pay for, but a licensing fee in order to utilize the intellectual property that let iPhones connect to cellular networks. Imagine having to buy an iPhone, a mobile phone plan, and also pay Apple for the right to carry its product in your pocket—seems a bit unfair, right? Apple thought so, too. This was what started the long legal battle between the two companies.
Qualcomm agreed to pay Apple back for the royalties in the form of a rebate each year. In order to qualify for this rebate, Apple had to agree to exclusively use Qualcomm chips in its mobile phone products. Qualcomm also requested that Apple not work with any regulators regarding the royalties Instead of complying with the agreement, the company went ahead and switched to Intel chips in its mobile phones and started working with Korea on regulations for IP royalties. This wasn’t just business at this point, Apple was clearly trying to make a point to attack Qualcomm.
Qualcomm, however, quickly fired back with a counter lawsuit. Since Apple breached its contract with the chip maker, Qualcomm felt that it was in the right to have its royalties paid. This didn’t go over well, and the FTC ended up filing an anti-trust complaint against Qualcomm over the whole thing (which was settled back in January).
Now, with 5G on the forseeable horizon for the mobile phone world, Apple needed to figure out how to get back on good terms with Qualcomm. The tech company is the only company producing 5G capable chips at the moment. Apple knew it wouldn’t be able to get a slice of the pie unless it settled its legal battles with the company. Finally, with a settlement signed and done, a 5G capable iPhone might be in the pockets of consumers sooner than we thought.