back to article That's the way the Cook, he crumbles: Apple, Qualcomm settle patent nuclear war – as Intel quits 5G phone race

Apple and Qualcomm today settled out of court all of their various patent and licensing legal battles against one another around the world. This comes just one day into their latest dust up: a $30bn lawsuit brought against Qualy by Apple and its pals in San Jose, USA, a trial that just evaporated as a result of today's peace …

  1. Duncan Macdonald Silver badge
    Devil

    And a lot of lawyers are crying

    Many lawyers could have expected to end up multi-millionaires from these court battles.

    (Will they now sue Apple and Qualcomm for depriving them of earnings :-)) :-)) )

    Icon for the lawyers ==>

    1. Nick Kew Silver badge

      Re: And a lot of lawyers are crying

      Will that be worth more to shareholders than the article's $2/share extra earnings for Qualcomm?

      And how will such a bunch of lawyers let loose affect the forthcoming US election? If they push the buttons and pull strings on all those candidates, they'll surely provoke a big lawsuit or two somewhere to fund their contributions to the candidate who'll support them the most!

  2. whoseyourdaddy

    Xs with a Q modem for next year, maybe?

  3. Anonymous Coward
    Anonymous Coward

    Hmmm...

    Apple found itself in a mess due to the move to modems on Intels barely functional 10nm.

    Apple likely had a valid case against Qualcomm, but modems on acceptable terms makes more money for everyone. Except the lawyers.

    <sarcasm>Won’t anyone think of the lawyers? </sarcasm>

    1. DougS Silver badge

      Re: Hmmm...

      Apple wasn't scheduled to use Intel 10nm modems until fall of 2020 (the 8160) so it wasn't going to be a problem for Apple unless Intel still couldn't make 10nm work by summer next year.

      1. Anonymous Coward
        Anonymous Coward

        Re: Hmmm...

        “Apple wasn't scheduled to use Intel 10nm modems until fall of 2020 (the 8160) so it wasn't going to be a problem for Apple unless Intel still couldn't make 10nm work by summer next year.”

        That’s my assumption...10nm will never produce volume parts (IMHO). I suspect we will know by the end of this year when Intel announces an EUV process.

        The killer problem is a combination of a slow etching process (# of steps) combined with other process issues resulting in low yields. Intel don’t have a way of producing high volume parts.

        Speculation, but there are reasons behind it.

    2. whoseyourdaddy

      Re: Hmmm...

      "Apple likely had a valid case against Qualcomm"

      Except you don't need a valid case to go to trial.

      Just need to lean on the media to spread your POV to all corners of the earth and have really good lawyers. But, if the other side also has really good lawyers and marketing.

      Uh oh.

      A clearly had nothing to lose by waiting until the last minute to see if Qualcomm would cave.

      Downvote me all you want. You know I'm right. Apple escaped treble damages. My non-Intel iPhone works as expected. Life is good.

      1. Anonymous Coward
        Anonymous Coward

        Re: Hmmm...

        “Except you don't need a valid case to go to trial”

        True....but if you have a bunch of IP that might upset someone else’s applecart and the money to kick around some details in court, you may have a valid case after all. Particularly if that case results in everybody asking for a reduction in licensing costs that hurts both Apple (competitors have an even playing field) and Qualcomm (revenue, share price, maybe more)

        1. whoseyourdaddy

          Re: Hmmm...

          You can also push Judge Koh to revoke your entitlement to a FRAND rate on standard-essential IP.

          Quit while your ahead.

          1. Anonymous Coward
            Anonymous Coward

            Re: Hmmm...

            > You can also push Judge Koh to

            If you think you can push Judge Koh, you do not know her at all.

        2. John Brown (no body) Silver badge

          Re: Hmmm...

          "Particularly if that case results in everybody asking for a reduction in licensing costs that hurts both Apple (competitors have an even playing field) and Qualcomm (revenue, share price, maybe more)"

          I suspect that is the primary reason for this out of court settlement. Few $LargeCorp want their dirty washing aired in public and will often go to extreme lengths to avoid doing so. Now we'll never find out if Apple were paying over the odds nor what they are now paying. The smaller fish will carry on paying as they are now because they can't afford to take Qualcom to court.

      2. DougS Silver badge

        Uh, it was QUALCOMM that escaped treble damages

        Qualcomm was the defendant in the huge $27 billion suit that started yesterday, not Apple. Even if Qualcomm beat that suit and successfully sued Apple in their other actions, they would not be eligible for treble damages.

    3. Mark 85 Silver badge

      Re: Hmmm...

      Possibly Intel told Apple they couldn't deliver? Or they weren't going as Qualy is/was sucking up all the customers? If they bailed only because Apple settled that points to no other buyers.

  4. FozzyBear Silver badge
    Happy

    I thought i felt something

    It was like thousands of voices suddenly screamed out in terror and suddenly silenced as they contemplated having to drive last years BMW model

  5. DougS Silver badge

    Qualcomm must have been worried

    This case was the big enchilada, if they lost here even partially all their other licensees could potentially come back and sue them as well. Even if those other licensees couldn't claw back past overpayment they'd be able to pay Qualcomm less going forward - hence the big jump in Qualcomm's stock the minute this settlement was announced. I guess Qualcomm didn't like the look of the jury they ended up with yesterday or something?

    Unfortunately we'll never know the terms, Apple had withheld billions in payments from Qualcomm so the fact Apple had to kick in some cash is hardly surprising but if we knew the amount of the payment it would give a big clue as to whether this deal ended up closer to what Apple had been demanding or what Qualcomm wanted.

    The one company it is bad news for is Intel, since there's a chip supply agreement mentioned, though no mention of quantity so Intel may keep some iPhone volume after this year. Though given that Apple is working on their own cellular modem it might not make a whole lot of difference in the long run depending on when Apple is ready to start using their own. I wouldn't be surprised if they tried it out first in the lower end "Xr" class device, or even a new "SE", for the first model year just in case there are problems they didn't catch during testing.

  6. Tim99 Silver badge

    As you say, we'll never know the terms, but someone may be able to put together a rough idea when both companies post their results. It could be anything from Apple paying the full $7.5 billion + penalties that Qualcomm said that Apple and their contractors "owed"; down through the basic royalties to just, say, 10 cents a device...

    1. DougS Silver badge

      I don't think the range is anywhere near that large. The figures provided in the lawsuit that started yesterday stated that Qualcomm controlled 20% of the standards essential LTE patents and were charging Apple $7.50 a phone, and another group that controlled over 40% of the standards essential LTE patents were charging $3.36 a phone. That's where Apple got their argument that they should be paying $1.50.

      That $1.50 is the lower bound, not 10 cents - and really the lower bound is higher than that because why would Qualcomm surrender completely to Apple's demands unless they were losing the suit and risked treble damages? Giving in now they got a better deal than that. If the trial was going badly for them they might think that was the outcome and give in then, but not after one day! There's also no chance that Apple would agree to pay the full $7.5 billion - why would they give up on the eve of this huge lawsuit only to accept the deal that has been on the table all the time? They'd only do that if they felt Qualcomm was going to be completely victorious and end up owing nothing, which would also only be apparent after much more than one day of the trial.

      The reality is somewhere between the $1.50 and $7.50 figures. Maybe we'll see it in upcoming quarterly reports for Apple or when Qualcomm gets paid by Foxconn et al - Apple has been withholding payments to them and will pay them and then they'll pay Qualcomm. Apple has been keeping a contingency on their books for the full fee, so if they pay less than that it'll show up as a one time item on their earnings. I don't know how Qualcomm has been accounting for it, but it may show up as some sort of an extraordinary one time item though I'll bet they disguise it unless it is very close to the full figure.

      1. Anonymous Coward
        Anonymous Coward

        That ratio argument assumes only standards essential patents were part of the deal. And it will work but far from optimally. Apple sells premium phones and cannot afford to show pedestrian performance so they will need a license to more patents. Many provide just a tiny gain like a 1 percent battery life time improvement or speed advantage. With a license for a dozen non-standard patents and the corresponding software Apple will be able to gain an edge.

        So a proper analysis require that you know what they wanted to license, not the very minimum.

        1. DougS Silver badge

          Don't forget that Qualcomm needs a license to Apple's patents as well. When the first deal was made Apple was just starting to design their own SoCs, now they've been doing it for years and have developed a bunch of technologies themselves - Apple owned patents that Qualcomm undoubtedly uses either knowingly or unknowningly in the Snapdragon SoCs they sell. Not to mention all the patents Apple acquired from their acquisition of PA Semi and Intrinsity a decade ago, which provided them the people and know-how to design fully custom CPUs in the first place.

          There's a good chance they'd end up doing a cross license for all non-cellular patents at $0 for either side, and the licensing would then only concern cellular which Apple wanted all along. Apple might have been willing to make the full back payment or close to it if they got a much better deal going forward.

          If it is a good enough deal they might even abandon their efforts to design their own modem (though I hope that's not the case, even if they don't save any money I think they are better off for a lot of reasons controlling that technology themselves)

  7. Anonymous Coward
    Anonymous Coward

    Seems quite likely.

    >Of course, Apple could perhaps quietly buy up that 5G modem tech from Intel, giving the iGiant a few years to develop its own communications chips

    Rumour has it they've already been trying to do that by buying up engineers that Qualcomm and Intel have let go...

    1. Duncan Macdonald Silver badge

      Re: Seems quite likely.

      If Apple manage to make their own modem - they are still likely to have to pay Qualcomm for their IP in it. (As Qualcomm has many of the standards essential patents Apple will still have to pay.)

      More reasonably they could work out how to include Qualcomm's modems into a forthcoming Axx SOC to reduce the package count and assembly costs of a new phone or tablet

      1. Anonymous Coward
        Anonymous Coward

        Re: Seems quite likely.

        Qualcomm has already announced integrating modems into the SoC for 2020.

        As others have stated, making the modems is largely about IP licencing - combine that with energy efficiency and there's not much scope for innovation due to the need to interoperate with varied mobile equipment networks.

        The ownership of the IP for a lot of the mobile radio standards has shifted a lot since 3G where Qualcomm did very well out of the licencing relative to others. A lot of the IP belonging to "others" is now with new owners, including Apple.

        There are also questions over whether some of Qualcomms IP is valid given the overall IP portfolio used in 3G/4G/5G as there seems to be overlap between the vendors.

    2. DougS Silver badge

      Re: Seems quite likely.

      I think it is in Apple's best interests to develop their own modem, though they might not see it as quite so urgent as they would have yesterday. There will certainly be plenty of Intel engineers sending out resumes soon, and Apple could have their pick of the best of the lot.

      If Intel doesn't intend to do anything with cellular going forward, Apple could arrange to buy Intel's cellular IP (much of which they acquired from their purchase of Infineon, who supplied the modems for Apple's first few generations of iPhone) That would give them a better negotiating position with Qualcomm when they started using internally developed modems.

      I suspect within the next few months we'll either hear that Apple has been snapping up Intel engineers, or that Apple's job postings for cellular engineers have all disappeared and the assumption is that Apple's internal project has been scrapped. As an Apple investor, I hope not as I think that would be very short sighted but we'll see.

  8. Richard Tobin

    More likely the other way round

    "with today's deal with Qualcomm in the bag, there isn't much point in Intel continuing". More likely Intel gave Apple advance warning that they were going to pull out of 5G modem development, and that's why Apple settled so suddenly with Qualcomm.

    1. DougS Silver badge

      Re: More likely the other way round

      That's certainly possible but why would Apple settle on day 2 of the trial? If they let the trial go forward and it looked like Qualcomm was faring badly, they'd have a lot more leverage over them. It isn't as if they couldn't afford to wait until the end of the month to see if their negotiating position would improve. We're talking about the 2020 iPhone here, they could afford to wait a few more weeks.

  9. Waseem Alkurdi Silver badge
    Angel

    Obviously a late April Fool's!

    From the article:

    The Apple-Qualcomm deal, effective as of April 1, 2019,

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