Qualcomm soars after Apple patent settlement

Credit: Reuters - Business (Amazon FireT
Published on April 16, 2019 - Duration: 01:36s

Qualcomm soars after Apple patent settlement

Shares of chip technology company Qualcomm surged 22 percent after it reached a six-year licensing agreement with Apple, ending a long-running bitter dispute between the two tech giants.

Conway G.

Gittens reports.

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Qualcomm soars after Apple patent settlement

With billions of dollars on the line - Apple and chip supplier Qualcomm backed down from a major legal showdown just as their lawyers were squaring off in court.

The two sides agreed Tuesday to a six-year licensing agreement - putting to an end a two-year dispute.

Lawyers for Apple had accused Qualcomm of using "monopoly power" to set "unfair prices" and engaging in illegal patent licensing practices.

The claim involves chips that allow devices like the iPhone or Apple Watch to connect to wireless data networks.

Qualcomm charges for the sale of the chip in addition to a licensing fee.

Apple had called the licensing fee a "tax" on innovation.

The legal battle threatened to up-end the revenue stream tied to the 130,000 mobile patents held by Qualcomm.

In retaliation, Qualcomm had accused Apple of convincing suppliers not to pay royalties owed.

Tuesday's surprise settlement prompted a 22 percent rally in Qualcomm's stock price.

Apple was also a winner, although the reaction in its stock was more muted.

By reaching a settlement, Apple will now get access to Qualcomm's top-notch 5G chips.

With the legal battle over, Apple CEO Tim Cook and Qualcomm CEO Steve Mollenkopf, who were scheduled to take the witness stand in coming weeks, can now instead focus on how to deal with the global slowdown in mobile phone demand.

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