Intel announced last week that it had decided to leave the 5G mobile modem market to focus its efforts more on 4G and 5G modems for PCs and smart home devices, as well as its broader 5G infrastructure business.
Timing of the announcement was dramatic as it came just hours after Apple and Qualcomm struck a surprise settlement in the two companies’ ongoing patent infringement and royalties dispute related to Apple’s use of Qualcomm modems in the iPhone.
It is highly likely that Intel’s decision to close shop on its 5G mobile modems played a major role in Apple deciding to settle with Qualcomm. Intel became Apple’s sole supplier of smartphone modems last year as the dispute with Qualcomm dragged on and became only more complex, involving multiple lawsuits around the globe. But Apple has been growing concerned about Intel’s ability to supply next year’s iPhone models with 5G modems.
Announcing its departure from making 5G modems for mobiles, Intel CEO Bob Swan said in a statement that though the company was ‘excited about the opportunity in 5G and the ‘cloudification’ of the network, in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns.”
It is unclear when Intel came to this decision, or when it notified Apple about its intention, either way Apple is now forced to turn to Qualcomm for their 5G mobile modems, as there is no one else with the capacity or capability to meet the 5G needs of mobile manufacturers.
Apple and Qualcomm agreed to settle all ongoing lawsuits, putting an end to the blockbuster legal battle that has seen the two tech giants sue one another across the globe.
As part of the settlement, Apple will now pay Qualcomm an undisclosed amount related to royalties the chipmaker accused Apple of purposefully withholding as part of the dispute. Apple, conversely, initially accused Qualcomm of overcharging it for using its technology and components. The two companies have now reached a six-year global patent licensing agreement, which may be extended for another two years. They have also agreed for Qualcomm to supply parts to Apple for multiple years, which will now see Qualcomm’s 5G components make their way to Apple’s smartphones that are slated to feature 5G from 2020.
Apple and Qualcomm have been fighting over Qualcomm’s patent licensing practices for the last two years. Apple contended that Qualcomm was charging unreasonably high fees for essential patents and using its position as the dominant supplier of smartphone modems to demand those exorbitant prices. For Qualcomm, there was a lot at stake, including patent licensing accounts for the vast majority of its profits. For both sides, the stakes may just have been too high.
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