What does Apple and Qualcomm court case settlement mean for iPhone users

Apple and Qualcomm surprisingly announced that they had settled their two-year-long court battle early in yesterday morning. This was an ongoing bitter court battle which was also exaggerated by the fact that CEOs of Apple and Qualcomm shared a frosty relationship. While these corporate squabbles make for great storytelling, what does it mean for end consumers of the iPhone and how does it impact companies like Apple, Qualcomm and Intel which had replaced Qualcomm as a major components supplier to Apple.

What does it mean for users?

For the last couple of years, Apple’s iPhones have had inferior Intel modems — their theoretical capabilities haven’t been as good as Android phones. This was happening because of the litigation. But now that Apple has brought back Qualcomm as a vendor, iPhones from 2020 onwards will have the best capabilities including support for 5G networks, an area of expertise for Qualcomm. For the last couple of years, Intel became a supplier for the iPhone in some markets and in 2018 it became the sole supplier. Many people have complained that network connectivity on the iPhone hasn’t been on point with Wi-Fi also being too prone to drops — this could be directly co-related to the Intel modem. Qualcomm’s modems should change this.

What does it mean for Apple?

Apart from getting out of unwanted litigation, Apple’s hardware will be the best in the business. Apple doesn’t need to worry about its older phones getting banned in markets like China and Germany, where Qualcomm pushed for bans and temporarily won. This means its software teams can also focus on feature updates and not rework things in the OS for which it is being sued. Most importantly, Apple will 100% have a 5G iPhone in 2020 something that seemed on edge with Intel being the only designated supplier. Apple for a while had been unhappy with Intel’s progress on 5G modems and there were chances that Intel would’ve missed the deadline for it to ship a proper 5G modem for the iPhone.

What does this mean for Qualcomm?

Qualcomm gets back one of its biggest customers after 2 years of estrangement. This automatically means that there will be more orders which will scale to more revenue. More so, Apple will pay Qualcomm an undisclosed sum as a part of the settlement which will be in the range of billions. The biggest thing for Qualcomm is that its licensing business remains unaffected because an Apple victory in the courts had potential to destroy that business which would’ve been catastrophic for it which is why its share price also plummeted since the court proceedings. Overall, Qualcomm’s stock is also up by over 20% which means this is a bright day for Qualcomm.

What does this mean for Intel?

The announcement of this settlement basically has gutted Intel’s ambitions of competing as a mobile modem provider. The fact that Apple signed a deal with Qualcomm meant that Intel wasn’t going to be getting the level of volume as a sole supplier. This led Intel to announce that it was exiting the 5G mobile modem market effective immediately. Many people will lose jobs because of this decision, but considering Qualcomm again had Apple’s corner and had a technological leadership in the 5G space, this was a sensible decision as Intel would’ve struggled to compete. This allows Intel to be more profitable in the long term as the margins on the 5G modem business weren’t great.