Qualcomm and Apple settle lawsuit so Intel drops 5G smartphone chip

Qualcomm and Apple have settled their lawsuit so Intel is ditching plans to launch a 5G modem expected for the 2020 iPhone.

Apple looked set to skip a 5G iPhone this year amid its legal battle with Qualcomm and use a modem from Intel next year. However, Apple and Qualcomm have today settled their legal battle.

The lawsuit began in 2017 when Apple and its partners accused Qualcomm of abusing its market dominance to charge excessive royalties for use of its technology. Qualcomm countersued Apple, which resulted in more than 80 court battles around the world.

In a joint statement on Tuesday, Apple and Qualcomm announced “an agreement to dismiss all litigation between the two companies worldwide,” including claims against Apple’s contract manufacturing partners.

Qualcomm has produced a 5G chip ready for devices launching this year. Amid its legal battle with the company, Apple began transitioning away from Qualcomm to Intel for its modems starting with the iPhone 7.

Intel, however, wasn’t due to launch a 5G modem until the end of this year which is too late for the 2019 iPhone. Apple looked on course to skip this year and use Intel for a 5G iPhone in 2020. Within hours of Apple’s settlement announcement with Qualcomm, Intel scrapped its plans to produce the modem.

Bob Swan, CEO of Intel, said in a statement:

“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.”

Meanwhile, the only other major chip manufacturer ready to produce 5G chips for devices this year was Apple’s biggest rival Samsung.

In a testimony as part of the Qualcomm trial, Apple supply chain executive Tony Blevins confirmed his company had considered sourcing chips from Samsung but the discussions were “not an ideal environment” for Apple.

Samsung is due to produce one of the world’s first 5G smartphones. Earlier this year, Verizon announced it would have temporary exclusivity of the Galaxy S10 for its 5G network launch sometime “in the first half of 2019”.

While Apple often prefers to allow new technologies to mature before adopting them, being a year behind rivals in 5G could harm iPhone sales and damage the company’s image with consumers.

Fortunately, the settled lawsuit with Qualcomm now paves the way for Apple to launch a 5G iPhone this year. Of course, that’s no guarantee that Cupertino will – but the sudden lawsuit settlement hints at some urgency.

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