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Apple and Qualcomm settle royalty dispute, CNBC reports

The iPhone maker will pay the chipmaker as part of the settlement, which also includes a six-year licensing agreement
iPhone
As a result of the settlement, Qualcomm expects incremental earning per share of $2 as production increases

Apple Inc (NASDAQ:AAPL) and Qualcomm Inc (NASDAQ:QCOM) agreed to settle their royalty dispute, the two companies announced Tuesday, according to CNBC.

Apple will pay Qualcomm as part of the settlement, which also includes a six-year licensing agreement, hinting that future iPhone may use Qualcomm chips.

The chipmaker surged nearly 17% after the news broke, while the iPhone maker rose 0.3%. Other semiconductors jumped too, and the Philadelphia Semiconductor Index hit an all-time high.

READ: Qualcomm Inc loses first round of patent fight against Apple, says Bloomberg

As a result of the settlement, Qualcomm expects incremental earning per share of $2 as production increases, the company said.

On Monday, the companies began court proceedings in a San Diego federal court, a trial that was expected to continue until May. Each side was seeking billions in damages, according to CNBC.

In September, an International Trade Commission ruled that Apple had infringed a patent held by Qualcomm but that iPhones would not be banned from the US. A month later, per CNBC, Qualcomm CEO Steve Mollenkopf said he believed that the companies would soon settle, but Apple CEO Tim Cook contradicted him shortly after.

The companies have been embroiled in a legal battle since 2016. Apple bought Qaulcomm’s model chips, according to CNBC, but argued that Qualcomm was abusing its market position by making it pay licensing fees for its patents.

Going forward, Apple will buy Qualcomm chips again. 

Contact Andrew Kessel at [email protected]

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