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Apple, Qualcomm and Intel · April 2019

Hours Into the Trial

On the day opening statements began, Apple's lawyer told a jury that Qualcomm imposed its will on customers. Within hours Apple agreed to pay Qualcomm and buy its chips again.

◷ 2 min read

The trial was supposed to take five weeks. Tim Cook was going to testify, and so was Qualcomm’s co-founder Irwin Jacobs. Executives from the four contract manufacturers that assemble iPhones were lined up too, ready to say they had also been made to pay too much.

On April 16, 2019, in federal court in San Diego, the lawyers opened. Apple’s attorney, Ruffin Cordell, said Qualcomm’s grip on modem chips let it “set unfair prices,”“stifle competition” and “impose their will on their customers.” Qualcomm’s attorney, Evan Chesler, said the company’s stock had “plummeted” since royalties from Apple and its manufacturers stopped in early 2017, leading to layoffs and cancelled research. He scoffed at the idea that Apple, a company he said “dwarfed” Qualcomm, could claim to have been bullied.

Several hours after opening statements began, the companies announced a settlement. Every case between them, in every country, was dropped. Apple would pay Qualcomm, take a six-year license starting April 1, 2019, and buy its chips under a multiyear supply deal. Qualcomm’s shares closed up 23.4%.

The payment was not disclosed. About two weeks later, Qualcomm told investors to expect $4.5 billion to $4.7 billion in revenue from the settlement, which covered both the payment from Apple and the release of certain liabilities to Apple and its manufacturers.

The same day as the settlement, Intel announced that it would leave the 5G smartphone modem business and would not launch the 5G phone modems it had planned for 2020. Intel had been Apple’s only modem supplier since Apple dropped Qualcomm’s chips. According to Reuters, Intel had said its 5G chip would not be ready until 2020, which could have pushed a 5G iPhone into 2021, while rivals such as Samsung planned 5G phones that year. Apple had also disclosed in court earlier that year that it had held talks about modems with MediaTek and Samsung.

Which came first is not settled. Intel’s chief executive Bob Swan later told The Wall Street Journal that the settlement prompted Intel’s decision: “In light of the announcement of Apple and Qualcomm, we assessed the prospects for us to make money while delivering this technology for smartphones and concluded at the time that we just didn’t see a path.”

In July 2019, Apple agreed to buy most of Intel’s smartphone modem business for $1 billion. About 2,200 Intel employees would join Apple, and Apple said it would then hold more than 17,000 wireless technology patents.

In February 2025, Apple announced the iPhone 16e. Inside was the C1, which Apple called “the first modem designed by Apple.”

What this story shows

BATNA (Best Alternative to a Negotiated Agreement)Apple's only modem supplier was Intel, whose 5G chip was not due until 2020. That weak alternative is one plausible reason Apple settled; Intel's exit the same day removed it entirely.Focus on Interests, Not PositionsIn court Apple's position was that Qualcomm's prices were unfair. Reuters pointed to an interest underneath, a 5G iPhone without a year's delay, which the settlement served.

Sources

  1. Times of San Diego, Qualcomm, Apple End Billion-Dollar Patent Dispute With 6-Year Licensing Agreement, April 16, 2019
  2. Qualcomm, Qualcomm and Apple Agree to Drop All Litigation (press release), April 2019
  3. Intel, Intel to Exit 5G Smartphone Modem Business (press release), April 16, 2019
  4. Stephen Nellis, Explainer, How 5G drove moves by Apple, Qualcomm and Intel, Reuters, April 17, 2019 (as republished by Euronews)
  5. Android Authority, Intel CEO says Apple and Qualcomm settlement prompted its 5G modem exit, April 26, 2019 (quoting Bob Swan's interview with The Wall Street Journal)
  6. Qualcomm, Second quarter fiscal 2019 results (Exhibit 99.1 to Form 8-K), May 1, 2019
  7. Apple, Apple to acquire the majority of Intel's smartphone modem business, July 25, 2019
  8. Apple, Apple debuts iPhone 16e, February 19, 2025