Qualcomm reveals Apple's final 5G iPhone desperation bill, Tim Cook is glad it's over with

Qualcomm reveals Apple's final 5G iPhone desperation bill, Tim Cook is glad it's over with
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.

Effective as of April 1, Qualcomm went for a six-year global patent license agreement with Apple, with the option to be extended for two more years, and a seemingly endless chipset supply contract. Its financial terms are undisclosed no more, as Qualcomm tucked the lump sum amidst its quarterly results forecast for this current quarter which the company deems the third one in its fiscal year count.


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


"It’s personal. I don’t see anybody who can bridge this gap," tipped the WSJ recently about Apple and Qualcomm CEOs relationship but the big boys ironed out their differences quickly. Famed Apple analyst Ming-Chi Kuo forecasts a fall 2020 release date of the future 5G iPhones. That's the same timeframe as before but this time around, Apple is in a position to use the best that the 5G market can offer without triggering the NSA, CIA and other three-letter agencies' wrath.

Verizon got South Korea beat with the first commercial 5G connection to a retail handset, but the Koreans launched a nationwide 5G network, with the Galaxy S10 5G being its poster child when not in flames. We kid, but upon the phone's release there, Korea has all of its carriers offering 5G plans now. Korea Telecom announced three 5G price tiers. Among those, there is a "Super Plan" that offers truly unlimited 5G data without speed caps, and this one will go for the equivalent of $70, a pretty good price no matter how you slice it.

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. 

Apple's CEO Tim Cook went on record during the conference call with analysts yesterday to comment on the deal with Qualcomm and its 5G plans going forward:

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29 Comments

1. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

2 questions arise: 1. Qualcomm was owed - by Apple and it's partners - 7 billion but it receives 4.5; can you explain how come Apple "lost", "kissed qc feet", "crawled back" etc when it managed to save - for it and it's partners - 2-2.5 billions? 2. How much exactly is "Apple's desperation bill"? All I see is the global revenue that qc is going to make, I don't see how much is Apple going to pay... What am I missing?!

2. Back_from_beyond

Posts: 1194; Member since: Sep 04, 2015

Because Apple didn't save them anything. Qualcomm had an agreement with Apple to pay them $1billion annually for being the main/only supplier of modems to Apple. Qualcomm has withheld those payments when they learned the iPhone 7 wouldn't exclusively use Qualcomm modems. My guess would be that the amount that Qualcomm would've owed Apple has served to reduce the amount to $4.5billion.

6. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

Qualcomm owed Apple 1 billion the bonus, while Apple and partners owed Qualcomm 7.5. Even considering that Apple wrote off that billion, there are still 2 billions that are not accounted by Qualcomm...

8. sgodsell

Posts: 6835; Member since: Mar 16, 2013

At the end or f the day Apple is the one that broke the contract, period. Remember this contract was made years before Tim Cook and company decided to stop all payments to Qualcomm at the beginning of 2017. So Apple hasn't paid Qualcomm a dime since then. People forget that Apple has to pay Qualcomm for licensing the technology and patents. Plus for any chips they use, and the volume they use. Apple would get kick backs for exclusively, and based on volume sold. However Apple's owed one billion is a wash, especially since Apple hasn't paid a thing in over two years to Qualcomm. I do hope Qualcomm remembers to give Apple some special attention in the form of a special fee. Let's call it the FU fee to Apple for being such a good customer to Apple. Besides Apple's customers are always overpay for Apple's iPhones in general. So Qualcomm tacking on an extra FU fee, would only show that there is no hard feelings towards Apple. Besides Apple doesn't have a huge selection of modem providers to choose from. Not to mention Apple has to pay Qualcomm no matter what, even if Apple doesn't buy Qualcomms components.

10. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

Qualcomm earned $16 B the moment the agreement was announced, so I have a feeling that the "FU fee" for Apple is going to be a "TU fee". "Not to mention Apple has to pay Qualcomm no matter what, even if Apple doesn't buy Qualcomms components" Yes, royalties and only for the tech Apple needs.

11. wickedwilly

Posts: 572; Member since: Sep 19, 2018

Apple lost this war pure and simple, trying to defend them is just stupidity. The downside to Apple possibly could have been worse, but they set out to destroy Qualcomm, failed and in the end were so backed into a corner that they were forced to settle.

12. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

It sure feels nice to "loose" by saving 2B and also getting the modems and patents one might need to build one's own modems... Dude, you miss the entire point of this "battle": top Apple and Qualcomm stock owners are... wait for it... THE SAME; if you were an important shareholder in 2 companies that worth billions of $, would you have let one "set out to destroy" the other?! :)))

14. wickedwilly

Posts: 572; Member since: Sep 19, 2018

So are you saying there was no animosity between the two companies? If the important stockholders had "a say" in what both did, they would not have wasted tens of millions of dollars and precious management time bringing lawsuits against each other, would they! Would you say at the start that Apple sue Qualcomm for 10b and Q sue A for 10b and in the end Q gets 8b that it is a tie or Apple wins because it paid out less? No, it is 18b worse off than it sued for and Q has 8b more in the bank. Q is a clear winner. Yes, Apple gets a supply of components and rights to use, but Qualcomm get income from the sale of these.

15. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

I would say "here's another 8B that the US government will get 0$ taxes from". Let me guess: Qualcomm lost a few billions in the last year/s?

16. wickedwilly

Posts: 572; Member since: Sep 19, 2018

So you completely avoid the point, what has taxes got to do with who won this case? Answer nothing. Apple lost pure and simple, trying to cover it up as you are is just stupid.

17. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

There was a settlement, so nobody lost the case. I have showed at the time - based on facts, not stupid rumors that one can find even on phonearena - how much we know each party has won and now we have a new set of data. PS: confide yourself to bookkeeping, because - and I tell you again - if you really don't understand how tax exemptions work, you really understand s**t about business.

18. wickedwilly

Posts: 572; Member since: Sep 19, 2018

Leo, how you have the cheek to say anyone does not understand business or bookkeeping when you do not even know the difference between an asset or liability, I do not know. What we do know is there was a settlement and Apple ended paying the majority of the money owing and was forced to continue buying from Qualcomm. A victory for Apple would have been Qualcomm paying out to Apple and radically changing its policy, neither of which happened. You could argue it was not a complete victory, but it was a major one! But then you are someone who dreams he is a CEO of a major company and who has little or no knowledge of accounting who accuses a successful, qualified accountant who has served on many boards as a director of knowing nothing about business or accounting. That says it all really!

19. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

I must admit I don't (want to) understand bookkeeping: it's cheaper to hire minions (like you say you are) and free my time for the important tasks. "What we do know is ... Apple ended paying the majority of the money owing" How do you know that Apple will be paying more than 1 penny? Maybe it's not 4 but 44 B, but how do you know how much money is going to go from one to the other? Apple said nothing, Qualcomm said nothing, their lawyers and accountants are quiet, there's no document we have access to; ho do you know who and how much money it pays?! "and was forced [also Apple] to continue buying from Qualcomm." How were they forced? And Apple has been buying from Intel, how can they "continue buying" from someone they are not buying from now?! "A victory for Apple would have been Qualcomm paying out to Apple" As far as I know, Apple and its partners withhold 7 B while using Qualcomm products and/or services; while it gets 4.5 B, it means that Qualcomm has given Apple and its partners a 35% discount on its already supplied merchandise. What is that called in bookkeeping?

20. wickedwilly

Posts: 572; Member since: Sep 19, 2018

A Finance Director is not a minion, but a crucial part of any management team, if you were a CEO you would know that, but obviously, you are not, just a dreamer. I have read the news the same as you. If you take your No1 line in the first comment of this discussion:- "Qualcomm was owed - by Apple and it's partners - 7 billion but it receives 4.5; can you explain how come Apple "lost", "kissed qc feet", "crawled back" etc when it managed to save - for it and it's partners - 2-2.5 billions?" then how can you state this:- "How do you know that Apple will be paying more than 1 penny? Maybe it's not 4 but 44 B, but how do you know how much money is going to go from one to the other? Apple said nothing, Qualcomm said nothing, their lawyers and accountants are quiet, there's no document we have access to; ho do you know who and how much money it pays?!" Rather stupid yet again Leo. Regardless of your contradiction above, Qualcomm got $4.5 billion from the Apple Settlement, according to its latest Earnings Release. "Qualcomm today announced its quarterly earnings results and shared details on the amount of revenue that it will be receiving in the coming quarter as part of its recent settlement with Apple." According to Qualcomm they have already accounted for the revenue from the court case. Wrong again Leo, if you were a CEO you know it would be fraudulent to announce this in an official statement, if it was not the truth.

21. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

Sure you are; now put on your batman jammies and be the best financial director you can be. There is absolutely no contradiction in what I have said; let your mommy read it to you and explain it. "Apple settlement" doesn't mean Apple is going to pay the money.

22. wickedwilly

Posts: 572; Member since: Sep 19, 2018

HaHa, so funny, someone who claims to be a CEO and does not know he is making a blatant contradiction when he clearly does, its sad really. Let me explain, one minute you are saying Q was owed 7B but received 4.5B, the next you are saying we do not know. https://www.phonearena.com/news/Apple-CEO-Cook-Qualcomm-CEO-Mollenkopf-to-testify-in-big-bucks-trial_id114917 look at this link, a reminder you obviously would have read it. It says Apple and others sued for 27B now all legal action is off, you say 7B so an even bigger win for Q, the longer you look the worse it becomes. You do know that these settlements are usually registered in the court, which is why Q can provide for the income even if it has not received any cash. You would if you were a CEO with any knowledge about these matters. Face it Apple was using its financial might to get out of contractual obligations it had made years before. Once it was faced with no supply for its iPhones, that makeup by far the majority of its business and the only real reason it can make money from services, it crumbled and was forced to take what little it could.

23. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

You must certainly have a reading disorder... Can you point me to an (official) statement (from qc, Apple, one of their lawyers, IRS etc) that is proving Apple is going to be paying 10$, or 4.5B, or 7.98B (or any other number) for this settlement? The settlements are registered as... settlements, meaning "Apple and Qualcomm decided to drop the case; they owe x$ expenses for the court. The end". Apple had absolutely no problem getting 5G modems; maybe the parts wouldn't have been as good as what Qualcomm is able to provide, but they would have been good enough for at least 2-3 years (USA is still 2-3y away from what those "bad" Intel modems can provide as 4G speeds); plus, I'm sure they could cut a deal with Huawei - the biggest owner of 5G seps - to buy "honor" modems (Trump has no problem with honor, you know). You need to learn more, if you want to understand corporations.

24. wickedwilly

Posts: 572; Member since: Sep 19, 2018

My reading and understanding is excellent thank you, unlike yours has proven to be. I have already pointed to an official statement where Qualcomm has stated how much it is getting from Apple its latest financial announcement. "“We are pleased to have reached multi-year agreements with Apple, and look forward to continuing to support them as a customer,” Qualcomm’s CEO Steven Mollenkopf, said in an earnings call with analysts on Wednesday. Dave Wise, Qualcomm’s CFO, announced that as part of the settlement agreements, it was expecting somewhere between $4.5bn to $4.7bn as a one time payment from Apple that will go towards the third quarter of its fiscal year." Now tell me where you got your information that "Qualcomm was owed - by Apple and it's partners - 7 billion but it receives 4.5" It was not this announcement, yet the 4.5m has proved accurate. I am waiting. Now tell me how it is not hypercritical to say I provided data with no "official" statement (which I actually did anyway), when you did exactly that! Apple did have problems getting the leading modems including in the future 5G modems. What evidence do you have to say differently? It is no coincidence that Apple caved-in for this court case, just as the only realistic supplier at the time that could provide them in the numbers Apple requires, announces it will not be in this business anymore. You need to learn an awful lot more, from your performance here you clearly are not capable of holding a minor management position, you make far too many basic mistakes.

25. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

You have quoted someone (I can also quote a crazy person that is saying "Tim Cook, Apple ceo, anounced that, as a part of settlement, he's expecting Wise to give him a blowjob."), not Dave Wise, not Qualcomm and definitely not Apple. The only thing anyone knows is that Qualcomm will probably get 4.7B (out of 7 that were owned by Apple and its partners) and that's about all; nobody knows how much Apple is going to pay and how much Foxconn. Apple would have had 1.5 years to get 5G modems; during that time it could have built "6G" modems (50B to buy Intel, 1B to get every engineer in the world, 2-3B to buy Ericson 5G patents - which are more than what qc has)), but it would have probably been too expensive to invest in that now.

26. wickedwilly

Posts: 572; Member since: Sep 19, 2018

Leo, if you had even a basic understanding of how listed companies work or what was going on in the real financial world you would ok know the legal implications of lying in any announcement to a stock exchange. The quote I gave as I have said is from an official announcement to the NASDAQ on May 1 2019.https://investor.qualcomm.com/static-files/e8c6eb06-9de6-4214-a019-6267e8752b9b This is the address of the announcement you can see the quote there. More proof you are full of BS and not capable of holding the position you claim.

27. Leo_MC

Posts: 6616; Member since: Dec 02, 2011

I've read the report before I posted my first reply here and the ONLY place that Apple appears is in: "We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer. We are executing well on our strategic priorities as 5G commercial launches begin around the world. Our 5G technology and product leadership, as well as our expansion into new industries and product categories, creates a strong foundation for long-term revenue and earnings growth.” There's absolutely nothing in there that says how much money Apple is paying to Qualcomm (or how much money is getting paid). Not a SINGLE word about not 0, not 1B and definitely not $4B. The majority of the sites (because phonearena is not the only one that reported this) are posting tabloid like articles. If you're OK with that because it fits into your f**ked up Apple hate logic, go nuts, but I hate this kind of press and I take a stand, but not to you and not in front of you. Because I have said what I had to say and it takes more than a bookkeeping understanding of things to get something out of a discussion, I'm ending it here. Cheers!

28. wickedwilly

Posts: 572; Member since: Sep 19, 2018

You are lying about reading the actual announcement or reading it all. Page 5 second paragraph:- "On April 16, 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties. We also entered into a six-year global patent license agreement with Apple, effective as of April 1, 2019, which includes an option for Apple to extend for an additional two years, and a multi-year chipset supply agreement with Apple. While we continue to assess the accounting impacts of the agreements, our financial guidance for the third quarter of fiscal 2019 includes estimated revenues of $4.5 billion to $4.7 billion resulting from the settlement (which will be excluded from our Non-GAAP results), consisting of a payment from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities." You say not a SINGLE word about not 0, nor 1B and definitely not 4B. What does it say, 4.5 to 4.7 BILLION. No fxxxked up logic, just plain and simple facts. Just like the figures you quoted your self, before saying there were no figures in the public domain. This is nothing to do with bookkeeping just you denying contradictions you made and lying about data in the public domain.

29. wickedwilly

Posts: 572; Member since: Sep 19, 2018

It seems that the truth has made you silent. $4.5 billion to $4.7 billion written in black and white in a public announcement to the Nasdaq is pretty hard to deny, true to form though you stay silent rather than admit your blatant error.

13. mootu

Posts: 1408; Member since: Mar 16, 2017

The figure was "up to $7 billion" depending on how long the court case lasted. The longer the case lasted the more Apple had to pay, Apple set aside $7 billion in case the litigation dragged on for years. Don't forget Apple is still paying Qualcomm royalties on every phone it sells.

3. iloveapps

Posts: 521; Member since: Mar 21, 2019

Well the thing that matters here is Midan would be so glad that in 2020 apple will be using Qualcomm chip. I’m happy too because I don’t like to use an inferior intel or samsung chip.

4. mudcat626

Posts: 218; Member since: Jul 13, 2016

Something different happening here. After Apple earning call came on Tuesday, you see all the negative hyped stories , like this one, IPhone sales tanking, Huawei about to take over the world, etc, etc, but the stock price keeps going up..........

5. iloveapps

Posts: 521; Member since: Mar 21, 2019

Your stupid ignorant android troll. Analysts sees the light of revenue in services. Wake up man! People don’t replace their phone every year so apple’s strategy is to lock them up with services that no android can come up.

9. sgodsell

Posts: 6835; Member since: Mar 16, 2013

Well the stupid one is really the individuals that want to be locked into Apple's services. Especially when Apples iPhone sales globally are tanking. If Apple really wants users around the world to use their services, then Apple's services cannot be exclusive to Apple hardware. Which the vast majority of Apple's services are only available to Apple's platforms, and only Apple's platforms. The people that need to wake up are the Apple users. Cloud computing is the next major phase of computing, and please tell us where Apple is in that area. I will tell you Apple is next to nowhere when it comes to cloud computing. Also Apples AI endeavors place Apple at a stage where they are still throwing things at a wall, or basically close to no where.

7. oldskool50

Posts: 711; Member since: Mar 29, 2019

The only issue I have with this article, is you seem to keep panning out that, somehow this is Qualcomm's fault. Qualcomm is the only company that offers the tech that they offer in their hardware, because Qualcomm spends the time and money with every wireless carriers that OEM's will be making phones for, to ensure they offer the best possible hardware that is compatible with the type of services carriers need to offer. Even Broadcom does not offer this. Imagine the staggering costs it takes to sit and work with 100's of wireless providers all over the planet, to create what is basically a single solution that works for ALL of them. If you go and sign a lease to pay rent for a certain amount, you don't get to go to the court and say, I'm paying to much I need you to reduce what I am paying, because we are gettign less sales and we need to increase profits. Qualcomm was simply waiting for Apple to give up, because no matter how much money Apple would have spent fighting this, they would have lost anyway and they would have ended up paying far and away more money that they owed Qualcomm. At that point Apple was owing QC about $7-10B in cash. Apple losing would not only have meant they had to pay that, but they would have had to pay all of QC's legal fees and any extra loses that the court would have deemed Apple needs to pay for trying to hurt QC to begin with. This could have easily doubled or even tripled what Apple already owned. If every OEM would just stick it to Apple like they should, Apple wouldn't be a problem, because none of them need Apple, Apple needs them and Apple just found out they are not as powerful as they think they are. Now Apple is gonna be paying more money, and they have to pay off most of what they didn't pay before. Apple motto is, if you create a product, then you have a right to charge whatever you think it's worth. So why is this not Ok for anyone else? $7.50 per iPhone for a device, you charge 200%+ above what it costs you to make, seems like a really small price to pay, for a piece of hardware designed just for you and only you can use it.

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