How to play the semiconductor sector as chipmakers rise more than 30%
Apple Inc. (APPL.O) will pay Qualcomm Inc. (QCOM.O) US$4.5 billion to US$4.7 billion to catch up on licensing fees accrued during a two-year legal battle between the companies settled last month.
Qualcomm made the disclosure in its earnings report Wednesday, while Apple declined to answer questions about the settlement during its own second-quarter earnings conference call on Tuesday. The figure was less than the US$7 billion Qualcomm claimed Apple owed.
Apple had accused its former chip supplier of using a strong position in cellular modems to force the payment for artificially inflated technology licensing. It hadn’t made payments to contract manufacturers that get passed along to Qualcomm since the beginning of the second quarter in 2017.
The two reached a settlement April 16. In addition to Apple’s one-time payment to Qualcomm, the companies said they negotiated a multiyear agreement for Qualcomm to sell chips and license its technology to the iPhone maker in exchange for royalty payments.
Analysts and investors, particularly owners of Qualcomm’s stock, want to know what Apple will be paying the chipmaker on an ongoing basis and whether it has secured a discount compared with what is paid by other phone makers, such as Samsung Electronics Co.
Qualcomm executives declined to provide details on Apple’s future royalty payments during a conference call Wednesday with analysts. Apple didn’t respond to a request for comment.