Apple (AAPL) - Get Apple Inc. (AAPL) Report and Qualcomm (QCOM) - Get QUALCOMM Incorporated Report finally ended their long-running dispute over royalty payments for the chipmaker's smartphone equipment.
The settlement ends all litigation between the two companies and includes an unspecified payment from Apple to Qualcomm, according to a press release issued by Apple following the settlement.
As part of the settlement, Apple and Qualcomm also reached a six-year license agreement, effective as of April 1, including a two-year option to extend, and a "multiyear chipset supply agreement." That could mean that Apple is returning to using Qualcomm as its supplier for modem chips after switching to Intel (INTC) - Get Intel Corporation (INTC) Report when the dispute with Qualcomm began.
Intel announced Tuesday that it was dropping out of the 5G modem business, just hours after Qualcomm and Apple announced their settlement.
Qualcomm said that the deal with Apple will add about $2 in "incremental EPS" as its chip shipments ramp up.
Qualcomm jumped 19.5% in trading Wednesday to $77.15 after soaring 23% on Tuesday after the settlement was announced. Apple was up 1% to $201.25.
The dispute between Apple and Qualcomm dates back to January 2017. The original issue was Qualcomm's patent licensing practices, with Apple accusing Qualcomm of using its dominant position as a supplier of modems to charge unreasonably high fees, and it escalated over time to lawsuit and import bans spanning multiple countries and jurisdictions.
Court proceedings had begun this week in San Diego, with each side slated to deliver opening arguments on Tuesday when the surprise settlement was reached. Each company was suing the other for billions of dollars in back payments and damages.