Qualcomm to Receive $4.5 Billion from Apple

Posted on May 1, 2019 by Paul Thurrott in Apple with 16 Comments

Qualcomm revealed that Apple will pay it approximately $4.5 to $4.7 billion to dismiss all litigation between the two companies. The announcement came as part of Qualcomm’s quarterly earnings report, and the payment “includes a cash payment from Apple and the release of related liabilities,” the firm said.

“We delivered a better than expected quarter with earnings per share above the high end of our estimates” Qualcomm CEO Steve Mollenkopf said in a prepared statement. “We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer. We are executing well on our strategic priorities as 5G commercial launches begin around the world. Our 5G technology and product leadership, as well as our expansion into new industries and product categories, creates a strong foundation for long-term revenue and earnings growth.”

For the quarter ending March 31, Qualcomm recorded net income of $700 million on revenues of $5 billion. But Qualcomm’s financials, alas, have been struggling thanks to the Apple legal battle and to slowing growth in China, where surging industry powerhouse Huawei uses its own chipsets.

The Apple issue may be settled, but China is not, and Qualcomm warned that its inability to conquer that market will hinder sales for the rest of the year. “You’re going to see Chinese weakness reflected in the next couple of quarters,” Mollenkopf told Bloomberg.

As for the Apple payment, Qualcomm said it will “consist of a payment from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities.” It is expected to come in the current quarter.

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