The news yesterday that the massive, multi-billion dollar legal fight between Apple and chip maker Qualcomm has come to an end has big-time ramifications for Apple--and for the rest of us who use smartphones every day (heck, almost every minute of every day).

The battle started several years ago, when Apple claimed that Qualcomm had been overcharging it for chip licensing fees going back to 2013. Then, in 2017, Apple stopped paying.

The whole thing wound up in court, one of a series of multi-billion-dollar lawsuits between the two companies.

Who cares about a big fight between two giant companies? In short, anyone who wants a 5G iPhone. 

As long as the dispute was ongoing, Apple was likely going to have to use chips from Intel, and Intel is reportedly "behind schedule" on producing a 5G chip.

The settlement came just as both companies were beginning a $30 billion federal court trial over just one aspect of the case. Terms weren't disclosed in detail, except to say that:

  • the lawsuits are over,
  • Apple is making an unspecified payment to Qualcomm, and
  • the two companies worked out a six-year licensing agreement as part of the deal.

Just how much Apple has to pay will likely be revealed eventually, since both Apple and Qualcomm are public companies that have to report financial results.

"The multiyear deal is a huge vindication for Qualcomm," analyst Ben Wood told the Financial Times, "and likely an acknowledgment by Apple that it had run out of options ... There was a growing body of evidence that Intel, its current chip set provider, was struggling to deliver a 5G solution in a timely manner."

Wall Street agreed, by the way. Qualcomm's stock jumped about 25 percent after news of the settlement.

So, two big takeaways:

First, 5G is going to mean much faster internet on your phone than you're used to now. Exactly how much faster is a guessing game, but some estimates say it could be as fast as most hard-wired internet is now. 

One estimate suggests 5G could transmit information at about 300 megabits per second; the average home internet speed in the United States in 2018 was about one-third of that.

Other estimates vary, but basically they all say 5G should be really fast compared to what we're all used to. However, if you're an iPhone user and you want to keep using iPhones, you could have been left out if Apple didn't have access to a steady stream of 5G chips.

Second, there's what this means for Apple itself, on a broader scale.

Apple has been shifting and trying to open up new businesses--its push into content, for example--and one reason for that is that iPhone sales have been dropping hard.

But even though the party is smaller, it's not yet over: Apple did $52 billion in iPhone sales in the last quarter of 2018, a number that only seems small when you compare it to the same quarter a year earlier ($61 billion). 

Still, it's a heck of a business. And Apple had to find a way to protect it--and fast. No matter the cost, at least Apple has made sure that won't be a problem.

Published on: Apr 17, 2019
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