The ramifications for the settlement are momentous in light of the impending roll out of 5G and Qualcomm's status as the foremost supplier of 5G modems.
The Trump administration is said to be interested in settling to support Qualcomm as a counter-balance to Chinese rivals. Apple and Qualcomm announced the deal as the two companies were simultaneously in federal court in San Diego, arguing their cases on day 2 of what was their ongoing trial.
That basically kills off its 5G modem efforts for phones, at least, while allowing Chipzilla to continue shipping Xeon server processor components to power the backend of next-gen cellular broadband networks.
Qualcomm Inc. shares rose $4.25 (+6.03%) in after-hours trading Tuesday. Analysts said not using Qualcomm would hinder Apple's ability to create a market-leading 5G iPhone. To offset some of that extra cost, Qualcomm had agreed to give Apple a $1 billion annual rebate. And Intel was reportedly struggling to deliver its planned 5G modem, raising questions about whether Apple would even be able to deliver a 5G-ready iPhone in 2020. However, it has been made clear that Intel is exiting the 5G smartphone business. That trial is now over, as are all of Qualcomm and Apple's other legal tussles across the world.
The comments come a day after Reuters reported, citing sources and documents, that the United States will push allies at a meeting in Prague next month to adopt shared security and policy measures that will make it more hard for Huawei to dominate fifth-generation (5G) telecommunications networks. For Apple customers, it may mean getting your mitts on a cool new iPhone sooner (which also makes them richer).
FILE PHOTO: An employee of German Apple retailer Gravis displays an iPhone 7 and 8 in a store in Berlin, Germany, January 3, 2019.
As part of the settlement, all legal action worldwide between the two companies will be dropped, and Apple will buy Qualcomm chips again.
The settlement could also have an impact on China's Huawei Technologies Co Ltd, which is also in a licensing dispute with Qualcomm.
At the heart of the battle were the royalties Qualcomm charges for its patented chips, which enable smartphones to connect to mobile networks.
Apple's litigation chief Noreen Krall chatted privately with Qualcomm attorney Mark Snyder before Judge Curiel called the jurors back into the courtroom. A multi-year chipset supply agreement is also part of the settlement.