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Apple (AAPL) and Qualcomm (QCOM) have officially reached a settlement in their long-running and acrimonious patent dispute. The move came as a surprise to nearly everyone who has followed the years-long drama, as the companies announced their decision to settle shortly after wrapping up opening arguments in a California trial that was just one front in their patent dispute.
The fight between the two tech titans came down to Apple's assertion that Qualcomm was gouging it over patent royalties and requiring fees for technologies included in phones even when they weren’t using Qualcomm products. Qualcomm, meanwhile, accused Apple of patent infringement.
The settlement — which resolves several cases around the world — means that Apple will pay Qualcomm an undisclosed amount and pay an undisclosed amount of royalties on Qualcomm’s patents for six years. It's the chip agreement, though, that is most important for Apple, because it means the company may be able to sell 5G-capable iPhones sooner than previously expected.
But Apple is also notorious for holding off on adding new technologies to its devices until all of the kinks are worked out. In other words, don't expect this settlement to get you a 5G iPhone any time soon.
Apple and Qualcomm come together
Apple and Qualcomm settling their dispute seemed unthinkable a few months ago. The companies' bitter fight stretched from the U.S. to as far as Germany and China. Suits in those countries led to certain models of the iPhone being banned from stores, though China never seemed to really enforce the ban.
The U.S. International Trade Commission also sided with Qualcomm in a patent dispute, and recommended that some iPhones be banned from being imported to the U.S. A second, separate ITC ruling, however, did not call for a ban on iPhones.
But the settlement puts an end to all of those disputes, meaning both companies are finally in the clear.
What's more, Apple can now begin using Qualcomm's 5G modems to produce 5G iPhones, something that has vexed Apple since the legal tug-of-war broke out.
Using Intel's 4G LTE modems in iPhones was an easy solution for Apple when the patent fight with Qualcomm broke out. But Intel didn't have any 5G options available, and was developing the new chips from scratch. Apple also had the option of building its own chips, but that would have proven costly and taken too much time.
Qualcomm, meanwhile, is well on its way in the 5G race, meaning it was the only real choice Apple ever had for quickly getting 5G modems into its iPhones. Sure, Huawei CEO Ren Zhengfei said that his company was open to working with Apple, but there was no chance Apple was going to risk working with the Chinese firm, and potentially fall out of favor with the U.S. government.