Apple, Qualcomm drop litigation as Intel drops modems

Apple and Qualcomm surprised the technology world late yesterday by announcing the dismissal of all outstanding legal cases between the two, in a move which made sense only when Intel followed by announcing it was leaving the 5G modem market with immediate effect.

Apple and Qualcomm have been at each other's throats, legally speaking, for quite some time: Back in January 2017 Apple sued Qualcomm for £800 million in what it claimed were withheld payments relating to the use of Qualcomm modems in the company's iPhone and cellular iPad products; this was followed by a near-identical suit in China, and a counter-suit from Qualcomm alleging, among other things, that Apple deliberately reduced the performance of Qualcomm parts in order to make Intel equivalents seem faster. This was followed in November 2017 by claims that Apple had provided Intel with confidential Qualcom data relating to its modem parts. Since then, the two have been going toe-to-toe in courts worldwide.

The announcement late last night, then, that the pair were dropping all lawsuits against the other came as a distinct surprise to those in both the technology and legal fields - until, that is, Intel made its own announcement: It is to cease designing and manufacturing cellular modems with immediate effect, putting something of a fly in the ointment of Apple's plan to switch its products wholly from Qualcomm to Intel parts.

'We are very excited about the opportunity in 5G and the "cloudification" of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,' explains Intel chief executive Bob Swan of the company's shift. '5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.'

Intel's departure from the market has been long coming: The company's smartphone-oriented business units have consistently made a loss for the company, to the point where it folded it into its mainstream processing group as an apparent means of hiding the red ink in its balance sheet.

For Apple, it effectively leaves the company with little choice but to return to Qualcomm as a customer - which is exactly what it has done. As well as the cessation of all legal battles between the two, Apple has agreed to pay an undisclosed sum to Qualcomm and has signed a six-year licence agreement including a two-year extension option alongside a multi-year chipset supply agreement. Unsurprisingly, Qualcomm enjoyed a considerable share price bump on the announcement with a near-29 percent hike immediately following the press release's publication and a further 5.89 percent in pre-market trading. Apple and Intel, meanwhile, saw little movement.