Qualcomm Settles with Apple Over Patent Royalties

Shares of Qualcomm were headed higher on Tuesday after Wall Street learned that the company has settled with Apple over patent royalties.

In a trial this week in San Diego, California, the two companies settled and agreed to all legal action worldwide between them to be dropped and that Apple will buy Qualcomm chips again. Apple also will pay Qualcomm a payment, but there was no say on how much the figure is.

According to Qualcomm, it now sees a $2 increase in earnings per share.

Qualcomm shares rose over 20% on the news while Apple shares were up less than 1%.

“This was a major win for Qualcomm as fears of a loss in the courts was a major overhang on the name with Apple going after this IP issue full steam ahead,” Wedbush Securities analyst Dan Ives said.

“A settlement is a surprise to investors as ultimately Apple realized this was more about two kids fighting in the sandbox and they have bigger issues ahead with 5G and iPhone softness rather than battling Qualcomm in court.”

The press release on Apple’s website stated, “Qualcomm and Apple® today announced an agreement to dismiss all litigation between the two companies worldwide. The 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.”

Disclaimer: We have no position in any of these companies and have not been compensated for this article.