In one fell swoop, Apple cut its self-inflicted Gordian knot of 5G modem supply and paid Qualcomm undisclosed amount to settle the patent litigation and secure a multi-year contract for 5G iPhones. Apple had little choice but to settle, as Intel threw in the towel on 5G modem development when it learned that Qualcomm resolved its patent issues with Apple, while America’s homeland security institutions would balk at Huawei’s involvement due to geopolitical considerations.Samsung, on the other hand, simply can’t make enough of its own 5G modems to exclusively supply another huge customer. Apple will reportedly still hedge its Qualcomm bets with Samsung as a side dish. If you are wondering why, it is most likely planning to use the more advanced Qualcomm modems in placed where mmWave spectrum 5G networks are being established, while Samsung’s more affordable solution will remain for the sub-6 GHz crowd.
If it wasn’t for the $4.5 billion haul from Apple, Qualcomm’s revenue would have been down year-on-year – both the licensing business, as well as the chipset sales. Still, it made more than a billion in profits, and a huge chunk of that comes from patent licensing and royalties hauled in from nearly every major phone maker, including Huawei which makes its own chipsets and 5G modems. With the Apple agreement, the health of that business segment is only poised to grow further, considering the tens of million of iPhones that Apple is selling each quarter.
Et tu, Apple? To 5G or not to 5G
A true nationwide shift to 5G networks is not happening this year in the US anyway, despite Verizon lighting up more cities soon, so iPhone users won’t be missing all that much until then. Next year, however, most of the flagship phones of the spring season will probably have some sort of 5G connectivity support, be it with a Qualcomm, Samsung or Huawei modem, and Apple could have felt the pinch in that regard, hence the settlement with Qualcomm.