Apple to pay Qualcomm up to US$4.7 billion in patent dispute settlement

Apple Inc will be compensating chip supplier Qualcomm US$4.5 billion to US$4.7 billion for the licensing fees accumulated throughout the two-year patent dispute legal battle that was settled last month.

In an earnings report on Wednesday, Qualcomm announced the payment amount from Apple. The sum was previously undisclosed when the firms announced their settlement in mid-April this year. The amount is lower than the US$7 billion Qualcomm had earlier claimed Apple had owed.

On Wednesday, Qualcomm’s shares closed slightly higher by 0.28% or US$0.24, at US$86.37 while Apple's shares rose by 4.91% or US$9.85, at US$210.52.

Last month, Qualcomm and Apple settled their royalty dispute, with an agreement to drop all ongoing litigation between the two companies worldwide. The settlement includes the abovementioned payment from Apple to Qualcomm, signing a six-year patent license deal, and a chipset supply agreement which suggests that Apple will purchase Qualcomm chips for future iPhones.

Shares of Qualcomm had soared 22%, the largest gain in more than 19 years after the announcement last month, boosting the company’s stock to a market capitalization value of more than US$84 billion.

Apple and four companies in its supply chain were initially suing Qualcomm for up to US$27 billion in damages for overcharged chip royalties.

Qualcomm, which had denied on any wrongdoing, was asking for back-payments of at least US$7 billion from Apple and its suppliers in addition to billions in damages.

With the settlement and agreement made between Apple and Qualcomm, analysts think it opens up the possibility to a release of a 5G iPhone sooner-than-expected, using Qualcomm’s modem technology as it supplies chips that can connect to a 5G network.