Apple Will Pay Qualcomm $4.5B to Make Nice, Use Its Modems

Earlier this month, Apple and Qualcomm suddenly announced they would bury the hatchet and work together again on 5G technology. This came after an ugly period of war between the two companies, in which Apple reportedly deliberately engaged in a bad-faith attempt to persuade regulatory bodies that Qualcomm’s licensing and patents carried unfair fees that violated the FRAND (Fair, Reasonable, and Non-Discriminatory) agreements its core LTE patents should be licensed under.

The war between the two companies ended only when Intel was unable to meet Apple’s 5G requirements for inclusion in the iPhone in 2020 and both Samsung and Huawei proved unable to provide replacement silicon. Intel has since pulled its 5G modem altogether — Apple is said to be working on its own device, but the company hasn’t unveiled any details of that project and modems are complex and difficult to build. Even if Apple already has a modem in-design, it could be several years before we see it ship.

Either way, Qualcomm revealed on its conference call that it has signed an agreement worth $4.5B with Apple, independent of any chip revenue it will receive going forward. Apple has signed a six-year global patent licensing agreement, with an option to extend it for a further two years after that.

“We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer,” said Qualcomm CEO Steve Mollenkopf.

$4.5B isn’t much money by Apple standards. In fact, based on this report from Qualcomm’s case against Apple, it may not represent much more than what Qualcomm was fairly owed in royalty payments in the first place. Now that the Apple-Qualcomm case is over, documents that were going to be used at trial have surfaced, including emails that show Apple plotting deliberately over how to damage Qualcomm and reduce the payments Apple was required to make to the company.

These sorts of agreements often contain verbiage more important than the actual amount of money changing hands. When AMD and Intel settled their differences, most of the focus was on the $1.25B payment Intel made to close the case. Long-term, however, the additional freedom AMD got surrounding its x86 license monetization and restrictions have been just as important. Given how crunched Apple was, and how thoroughly it attempted to take Qualcomm to the cleaners, it wouldn’t surprise us to discover this deal went Qualcomm’s way in more ways than one.

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