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Apple set to catch up in 5G race after settling billion-dollar lawsuit with chip supplier Qualcomm
Apple has settled a lawsuit with Qualcomm, allowing the company to scramble to catch up with its competitors in the race to release 5G phones.
The agreement ends a multi-billion dollar legal battle over smartphone technology and will allow Apple to use Qualcomm's advanced chipsets.
As part of the settlement Apple will also make a payment to Qualcomm and the two have made a six-year license agreement. The size of the payout has not been disclosed.
The two-year legal row meant Apple had ceased to use Qualcomm's hardware in its smartphones,# in favour of rival Intel, whose 5G chipsets are not expected to be available until next year.
As a result the company faced being left behind its competitors, including Huawei and Samsung, both of whom have announced 5G-supporting handsets.
Qualcomm's shares rose by more than 20pc after the announcement, and Apple's rose by less than 1pc. Intel's initially dipped sharply before recovering.
Analysts had previously said they did not expect to see a 5G-supporting phone from Apple until next year, leaving the Silicon Valley firm trailing the rest of the market in allowing its customers to access to the new faster internet speeds, which are being rolled out in parts of the US and UK this year.
The row had also resulted in the International Trade Commission recommending a partial ban on iPhone imports last month, after Qualcomm argued that the phones, which were assembled in China, infringed on its patents.
The case, being heard in a federal court in San Diego, California, began this week and had been expected to last several months. Jury selection took place on Monday and legal arguments were expected to begin on Tuesday.
In a joint press release the companies said their settlement "includes a payment from Apple to Qualcomm".
"The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement," the statement said.
Apple had been seeking $27bn (£20bn) in damages from Qualcomm, amid claims that it charged “disproportionately high” fees to access its patents for high-speed smartphone modems, which control how the phones access the internet.
The chip supplier's business model involves charging manufacturers up to 5pc of the selling price of a device to license its patents. Apple argued that its royalty demands were extortionate and directed its suppliers to cease paying royalties to the company.
Qualcomm was also seeking damages of up to $15bn in lost revenue. It claimed that it didn't force Apple to use its chips and that the company was simply trying to get a better deal.
Apple's smartphone sales have suffered in recent months, and it cut its sales forecasts for the first time since 2002 earlier this year.