Qualcomm’s Q2 results have revealed that Apple is set to make a one-off payment of between $4.5 and $4.7 billion to compensate for unpaid royalties during the two firm’s patent litigation.
Revenues, which do not include any royalties from Apple, rose by 5 per cent to $5 billion, beating expectations.
“We delivered a better than expected quarter with earnings per share above the high end of our estimates, reflecting stronger QTL results and solid execution in QCT,” said Steve Mollenkopf, Qualcomm CEO.
“We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer.
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. However, Qualcomm’s outlook was lower than expected thanks to the ongoing contraction of the smartphone market – especially in China.
Indeed, even when taking future Apple royalties into account, licensing projections are relatively static.
Qualcomm believes demand for 5G smartphones will stimulate marketing demand, while there is also the likelihood that the settlement with Apple will allow Qualcomm to supply modem chips for the 5G iPhone.
The San Diego-based firm’s technology is already used in the vast majority of flagship handsets from major manufacturers.
“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,” added Mollenkopf.