Intel walks away from 5G smartphone modem

Viva Tung  CNET

Qualcomm was the sole supplier of iPhone modem chips between 2011 and 2016, before Apple split the contract with Intel.

Qualcomm's shares gained $13.27 to close at $70.45 in regular trading, marking the stock's best day since 1999.

Hours after Qualcomm and Apple announced a six-year licensing agreement as part of a royalty settlement, Intel made a decision to exit the future 5G smartphone market. Apple chief Tim Cook and Qualcomm's CEO Steve Mollenkopf are both expected to appear during the trial, which is set to last around a month.

On the other hand, Qualcomm has talked about the settlement of all litigation against Apple in a blog post.

Qualcomm and Apple® today announced an agreement to dismiss all litigation between the two companies worldwide.

In addition to calling it quits on 5G modems for smartphones, Intel is also reassessing its commitment to 4G LTE and 5G modems for PCs and IoT devices.

Qualcomm had, meanwhile, alleged that Apple was using its technology without paying for it.

The chipmaker would have potentially been forced to pay up to $27 billion in damages for overpaid royalty fees and Qualcomm was also seeking more than $7 billion in unpaid royalties from Apple and its supplier.

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Huawei has cast doubt on its founder's claims that the company could supply rival Apple with 5G modem chips. It also included a multiyear agreement for Qualcomm to supply chips to Apple.

Perhaps now that Apple is well on its way to developing and manufacturing its own chipsets, it wont rely on Qualcomm as much as it had in the past.

Then a year ago, as Apple's legal battle with Qualcomm heated up, Intel became Apple's sole supplier for 4G wireless chips in the iPhone.

The settlement was announced as opening arguments were beginning in San Diego federal court in the federal trial of a patent dispute between the two tech giants. And Intel was reportedly struggling to deliver its planned 5G modem, raising questions about whether Apple would even be able to deliver a 5G-ready iPhone in 2020.

This brings an abrupt end to the complicated legal battle between the two firms, which began when Apple accused Qualcomm of charging more than it should on patents "for technologies they have nothing to do with."

In February this year, Intel advised Apple that it would not have 5G modems until 2020.

CNBC was the first to report the settlement, with confirmation from Apple and Qualcomm coming shortly afterward Tuesday. Either Qualcomm had evidence so strong that Apple didn't think it would win the case, or Apple needed something only Qualcomm could provide.

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