Qualcomm and Apple have reached a settlement in their long-running legal dispute, and as a result Intel has abandoned its plan to launch a 5G modem that had been expected for a 2020 iPhone.
Until now, Apple appeared likely to miss a 5G iPhone this year because of its litigation with Qualcomm and had planned to rely on Intel’s modem for future devices. However, the new settlement between Apple and Qualcomm changes the landscape.
The legal battle began in 2017, when Apple and some of its partners accused Qualcomm of leveraging its market position to demand excessive royalties for use of its patented technologies. Qualcomm countered with its own lawsuits, triggering more than 80 legal actions around the globe.
In a joint statement released Tuesday, Apple and Qualcomm announced they had “an agreement to dismiss all litigation between the two companies worldwide,” which also includes claims involving Apple’s contract manufacturers.
Qualcomm has developed a 5G modem that could be used in devices launching this year. Amid the dispute, Apple had been shifting away from Qualcomm toward Intel modems, a transition that began with the iPhone 7. Intel’s 5G modem, however, was not scheduled to ship until late in the year—too late for the 2019 iPhone—so Apple had appeared likely to wait until 2020 to introduce 5G using Intel’s technology. Shortly after Apple and Qualcomm announced their settlement, Intel confirmed it was dropping its plan to produce a 5G modem for smartphones.
“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,” said Bob Swan, CEO of Intel, in a statement.
Aside from Qualcomm and Intel, Samsung was the other major chipmaker positioned to supply 5G chips for devices this year. During testimony in the Qualcomm trial, Apple supply chain executive Tony Blevins said Apple had considered sourcing chips from Samsung, but that the talks were “not an ideal environment” for Apple.
Samsung was slated to produce one of the first commercial 5G smartphones. Earlier this year, Verizon announced temporary exclusivity for its 5G launch of the Galaxy S10, expected in the first half of 2019.
Apple often takes a cautious approach to adopting new technologies, allowing them to mature before integration. Still, falling a year behind competitors on 5G could affect iPhone sales and harm the company’s perception among consumers.
The settlement with Qualcomm removes a major legal barrier and makes it possible for Apple to introduce a 5G iPhone this year. While the agreement does not guarantee that Apple will move immediately, the unexpected resolution suggests there may be increased urgency to bring 5G-capable iPhones to market.
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