Qualcomm, an American MNC with a billion dollar turnover derives most of its revenue from chip making. A bulk of its profits comes from patent licensing businesses. Earlier, Apple and Qualcomm had a good fortune together. Unfortunately, Apple faced legal issues about a chip patent and failed to pay any kind of royalty to Qualcomm. Therefore, the relations between Apple and Qualcomm are not so good since the last two years.
Apple paid $6-$7(approx.) per iPhone to Qualcomm but now it will rise to $8- $9(approx.). This compensation by Apple will hike the stocks of Qualcomm by 20percent(%). Qualcomm is at best of its fortune since 1999. They also mentioned :
“Qualcomm expects incremental earnings per share of $2 as product shipment’s ramp.”
“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 two companies started proceedings in a trial in federal court in San Diego on Monday, which was expected to last till May. The anti-trust case was originally filed by Apple in early 2017. And resultantly, Apple is paying to Qualcomm.
This is what the press reports say:
” 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. “
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