Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined. This means that the pair will stop any further litigation (as far as this particular matter is concerned).
In its federal lawsuit in San Diego, Apple alleged that Qualcomm "illegally double dips" by forcing companies to pay for a license to use Qualcomm patents as well as purchasing the technology itself.
Apple argued that the chip technology it licensed from Qualcomm was fundamental to how smartphone's work, and that its payments should therefore be at a "reasonable rate", under the law.
The two firms have also agreed a six-year global patent licensing agreement and also agreed for Qualcomm to supply parts to Apple for multiple years.
The surprise truce announced Tuesday came just as the former allies turned antagonists were facing off in a federal court trial that was supposed to unfold over the next month in San Diego.
Following this news, Qualcomm saw its stock price rise more than 20% to a total market cap of $85 billion.
This unexpected news sparks life into rumors about whether Apples 2020 iPhones would indeed feature 5G modems built by Qualcomm or Intels as initially planned. But Qualcomm stopped making this payment after Apple spoke out against it during a hearing held by the South Korea Fair Trade Commission.
In 2015, Qualcomm paid a $975 million fine to settle Chinese government claims that it charged too much for technology royalties. Intel, a Qualcomm competitor, sharply dipped on the news before recovering.
Apple has an experience of working with a number of modem manufacturers for its iPhone handsets for LTE and 4G connectivity. As a part of the settlement worldwide, Apple will be paying Qualcomm. With the Apple-Qualcomm row in full swing, Apple had started using Intel's components instead - but with Qualcomm apparently now back on good terms, that could well change.
Apple and Qualcomm have signed an agreement to end all of the outstanding legal cases they've brought against each other. Either Qualcomm had evidence so strong that Apple didn't think it would win the case, or Apple needed something only Qualcomm could provide.
The chipmaker would have potentially been forced to pay up to $27 billion in damages for overpaid royalty fees and Qualcomm was also seeking more than $7 billion in unpaid royalties from Apple and its supplier.