The Apple’s $4.5 Billion Apology

The Apple’s $4.5 Billion Apology

Apple settled with Qualcomm few weeks ago. Now, we are learning that it paid Qualcomm $4.5 billion. That is a lot of money for starting a fight and then paying to apologize because without the “enemy” your business has no future. Yes, for iPhone to have a 5G version within the next 12 months, Qualcomm must be in the equation since Intel Corp is not yet ready, and going to Huawei for the chips may not be optimal for a U.S. company when Huawei is under the crosshairs of the U.S. government.

How much is an apology worth? Well, if you’re Apple, it turns out the number is at least $4.5 billion, which is the amount that Qualcomm revealed in its Q2 earnings it will get from the settlement agreement between the companies, which had previously been embroiled in an ugly patent dispute for the past few years.

The Apple / Qualcomm settlement was an unexpected shift that came early in the trial between the two companies. According to a report from Bloomberg, Apple had decided that Intel’s modems (which Apple had been exclusively using in the interim due to its fight with Qualcomm) wouldn’t be ready in time for a 5G iPhone, leading Apple to pony up the newly revealed sum of between $4.5 to $4.7 billion to make up with Qualcomm. That amount of money is separate from any future royalties that Apple will pay for using Qualcomm chips in its devices going forward, too.

This is a total and complete victory for Qualcomm. Sure, Apple is well loaded that this is largely insignificant – Apple has a cash hoard totalling a reported $225.4 billion. Yet, it matters in case it wants to start fights next time.

The Promise of 5G iPhone is Why Apple Settled with Qualcomm

 

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