Qualcomm expects to receive up to $4.7 billion from Apple settlement

Qualcomm expects to receive up to $4.7 billion from Apple settlement”

Qualcomm revealed that Apple will pay it approximately $4.5 to $4.7 billion to dismiss all litigation between the two companies.

Apple's payment will be included in Qualcomm's Q3 results, while licensing revenue will also reflect the fact that the iPhone maker is once again paying royalties.

Qualcomm made the disclosure in its earnings report on Wednesday, while Apple declined to answer questions about the settlement during its own second-quarter earnings conference call on Tuesday.

The stock kept most of the 50%-plus gains of the past few weeks, reflecting investor relief that Qualcomm had found a path to resume supplying chips to the iPhone.

Qualcomm factored the additional revenue into a forecast in its latest earnings release, saying the money would be a payment "from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities". Qualcomm mentioned Apple's one-time payment of Qualcomm's royalties, the signed six-year license agreement, and the chip agreement. The figure was less than the US$7 billion Qualcomm claimed Apple owed. Financial details have not been disclosed but the deal is expected to help Qualcomm regain the pre-eminent mobile chip position it held in the early 2010s.

For comparison, Qualcomm's entire revenue for the January-to-March quarter was $4.9 billion. Since the settlement, Qualcomm's share price has risen by 43%, and Apple's has also risen by more than 5%.

The Apple issue may be settled, but China is not, and Qualcomm warned that its inability to conquer that market will hinder sales for the rest of the year. Wall Street is expecting earnings of 87 cents a share on revenue of $5.08 billion. Steve Mollenkopf, CEO of the company, said their partnership with Apple is executing well on strategic priorities as 5G commercial launches begin around the world.

Qualcomm estimated it would ship between 150 million and 170 million of [its cellular phone system-on-chips] in its third quarter, a decrease of as much as 25% compared with the same period past year.

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