Apple to Pay Qualcomm Over $4.5B In Past Licensing Fees

According to Qualcomm’s latest earnings report released this week, Apple will pay the company between $4.5 and $4.7 billion as part of the settlement the two firms made last month.

Qualcomm Comes Out As Clear Winner In The Settlement

We’ve already known that Apple wasn’t on the winning side in the settlement between itself and Qualcomm. The iPhone maker had to switch back to its lawsuit rival, Qualcomm, once Apple realized that Intel would fail to deliver the 5G modem for its 2021 iPhones. Therefore, Apple wasn’t in a position in which it could make too many demands, especially since it was Apple that first launched a lawsuit in the first place.

Now we've learned, according to Qualcomm's Q2 fiscal 2019 results, that Apple owes the chipmaker $4.5-$4.7 billion in back licensing. A previous report estimated that Apple would be paying $8-$9 per iPhone in patent royalties, an increase from the previous $7.5 payment per iPhone that the Cupertino company was making.

Where Qualcomm Goes From Here

Despite the large amount of money it will receive from Apple, as well as the six-year agreement the two companies made, Qualcomm isn’t expected to increase its revenues significantly until 5G mobile networks start rolling out this year and the next. Qualcomm estimated that it will make $4.7 billion to $5.5 billion in revenue in the next quarter, which would have a mid-point slightly below the $5.29 billion analysts were expecting.

Although Qualcomm came out as a big winner in the dispute with Apple, the company is not out of the woods yet in regards to antitrust accusations. The FTC antitrust lawsuit against Qualcomm, in which the government agency alleges that Qualcomm’s licensing practices are anti-competitive, is yet to be resolved.

Last year, the European Union fined Qualcomm $1.2 billion over an abuse of its dominant position in the wireless modem market. China previously fined Qualcomm $1 billion, and South Korea also fined the chipmaker $854 million, but the fine was eventually reduced to $200 million.