Qualcomm gains $4.5B to $4.7B from Apple settlement
The settlement deal between Apple and Qualcomm, previously a secret, will net the chipmaker between $4.5 billion and 4.7 billion, according to regulatory filings issued on Wednesday.
The sum was published in Qualcomm's quarterly earnings. Some earlier analyst estimates put Apple's payments as high as $6 billion plus ongoing royalties.
Until now the companies only identified terms as including "a payment from Apple to Qualcomm," "a multiyear chipset supply agreement," and a six-year licensing agreement with a two-year option to extend.
The deal should allow Qualcomm's 5G modems to appear in 2020 iPhones. Apple was reportedly frustrated with Intel's slow progress on 5G, and in fact Intel announced its departure from 5G modems the same day the settlement was revealed.
While 5G may have been an impetus behind burying lawsuits, on the first and only day of the Apple v. Qualcomm trial, the latter exposed Apple documents showing the iPhone maker had been planning to force royalty payments down for years, using tactics that would "hurt Qualcomm financially" and "put Qualcomm's licensing model at risk." It even deliberately licensed less expensive patents to make Qualcomm's demands seem excessive.
Pursuing the case further may have risked backfiring on Apple, despite widespread criticism of Qualcomm's business practices. The chipmaker has been accused of pressuring chip buyers into signing patent licenses at the same time, and/or at exorbitant rates. Government agencies, such as Europe and South Korea's, have already leveled penalties.
The sum was published in Qualcomm's quarterly earnings. Some earlier analyst estimates put Apple's payments as high as $6 billion plus ongoing royalties.
Until now the companies only identified terms as including "a payment from Apple to Qualcomm," "a multiyear chipset supply agreement," and a six-year licensing agreement with a two-year option to extend.
The deal should allow Qualcomm's 5G modems to appear in 2020 iPhones. Apple was reportedly frustrated with Intel's slow progress on 5G, and in fact Intel announced its departure from 5G modems the same day the settlement was revealed.
While 5G may have been an impetus behind burying lawsuits, on the first and only day of the Apple v. Qualcomm trial, the latter exposed Apple documents showing the iPhone maker had been planning to force royalty payments down for years, using tactics that would "hurt Qualcomm financially" and "put Qualcomm's licensing model at risk." It even deliberately licensed less expensive patents to make Qualcomm's demands seem excessive.
Pursuing the case further may have risked backfiring on Apple, despite widespread criticism of Qualcomm's business practices. The chipmaker has been accused of pressuring chip buyers into signing patent licenses at the same time, and/or at exorbitant rates. Government agencies, such as Europe and South Korea's, have already leveled penalties.
Comments
Probably exactly what they paid. The point of taking them to court was to get future licensing fees down to more reasonable levels. I doubt the settlement favored either company... I would hazard to guess that Apple is still paying a percentage of total cost, but with some kind of cap.
I still think Qualcomm is going to lose big with the FTC/ITC and be forced to abandon their monopoly-abuse business model at some point in the not-too-distant future.
I'm pretty sure the $9 per unit figure isn't accurate, as that stemmed from the idea that the payment was for devices manufactured during the dispute period. What is clear now is that this figure includes the rights to utilise the patent portfolio.
So based on the 4.7B figure and current sales it's no where near $9, and that is when excluding iPads, Apple Watches and any other cellular devices that come under Qualcomm's patent portfolio. Additionally this also assumes that Apple don't make any further gains in sales, where the licensing payment would be further amortised. My back of the envelope is $3.50 per device.
Qualcomm renewed its relationship with Apple, has an infusion of money, and is done with expensive lawsuits that were largely not going its way.
Qualcomm didn’t gain any leverage against Apple with its lawsuits. Apple worked around the China injunction, got the German injunction overturned, held off a US injunction, won its billion dollar claim, and was likely going to win this lawsuit in regards to Qualcomm charging discriminatory pricing for standard essential patents.
Both companies benefit from resolution but if the rumors are right Apple got everything it asked for which seems right considering Qualcomm’s behavior in terms of standard essential patents. Qualcomm can now focus on 5g competition and other lawsuits.
I may be mistaken in this, of course. But it sounds like we’re working off two different sets of figures on that envelope, unless I’ve misinterpreted what you wrote.
A one time payment of $4.5-4.7 billion would represent a significant discount for Apple. But I can't get the numbers to work out close to $3.50 per device, they point to something quite a bit higher.
I think Qualcomm has already, effectively, been forced to abandon much of its business model.
This is one thing that I think a lot of people, who assert that Apple capitulated, are missing when it comes to the Qualcomm - Apple settlement. By the time the FTC trial wrapped up, the only plausible argument that Qualcomm had left with amounted to this: Yeah, but we aren't in position to do those kinds of things anymore. So you don't need to impose remedies to prevent conduct that wouldn't recur anyway. Effectively, Qualcomm argued that it no longer had the monopoly power to impose the kinds of terms it had previously imposed.
So the narrative that Apple had to capitulate and agree to much the same terms it had objected to because it needed Qualcomm to supply it with 5G modems doesn't make sense. If that were the case - if Qualcomm used that kind of leverage to get heavily Qualcomm favoring terms - then Qualcomm would likely have been sinking itself when it came to the sanctions which Judge Koh (or someone else) might impose. And Qualcomm would have understood that.