Apple, Qualcomm settle all legal disputes

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"Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide", according to a joint statement issued by the companies. Both sides scored victories in various court systems but they're finally calling a truce.

Intel is now supplying the modems for Apple's iPhone XS and XR handsets, and it won't be backing out that commitment.

Now that Qualcomm is back in the fold - the two companies reached a six-year licensing agreement and a "multi-year" chip supply deal - Apple no longer needs Intel. Intel's share price volatility on Wednesday rose slightly by 0.76% nearly immediately after its withdrawal and after a few hours, the stock price rose by more than 4%.

In particular, Apple claimed that Qualcomm had overcharged for chips and refused to pay some $US1 billion ($1.39 billion) in promised rebates. The settlement, which includes an agreement by Apple to use Qualcomm's chips, may help Apple's plans to add high-speed 5G service to its future phones. The company has been developing its own modems but those weren't expected to be ready until 2020 at the earliest, with 2021 being a more realistic date. The Federal Trade Commission has accused the company of using its royalty system to stifle competition in the mobile chip market in another case in which Apple played a central role. Why did Apple sue Qualcomm?

As part of the settlement, Apple has agreed to pay an unspecified amount to Qualcomm and both parties have struck a 6-year patent license deal and "multiyear" wireless chipset deal. In return, the chipmaker filed a countersuit claiming that Apple throttled its chips in the iPhone 7, and tried to ban Apple devices in multiple countries.

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The fight centred on royalty payments that Apple made to Qualcomm for using the latter's modem chips, which provide smartphones with a means of accessing mobile data networks. More recently it was reported that Intel was running behind schedule and Apple was considering tapping on the shoulders of other OEMs such as Samsung, Huawei and even MediaTek.

Apple gets to break its dependence on a single chip maker and Qualcomm gets to do business with a large customer.

The settlement was announced as opening arguments were beginning in San Diego federal court in the federal trial of a patent dispute between the two tech giants.

Bond investors also joined in, with Qualcomm's 4.3 percent 2047 issuance becoming one of the most heavily traded bonds in the USA corporate space on Wednesday, according to capital markets publication IFR. Apple is due to report its quarterly results on April 30 while Qualcomm is scheduled to release its numbers on May 1.

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