Qualcomm said it would make $4.5 billion to $4.7 billion in the current quarter as part of its settlement with Apple over the chip supplier's patent licensing fees. The legal agreement includes a payment from Apple for withheld licensing fees and releases the money it reserved during the dispute to repay or refund Apple or its contract manufacturers, Qualcomm said in a statement.

The payment's terms came out when Qualcomm reported its second quarter results Wednesday. Qualcomm is struggling amid an ongoing slowdown in smartphone sales and cooling consumer demand. Without Apple's payment, the company said its sales in the third quarter will total $4.7 billion to $5.5 billion, down from $5.6 billion a year ago. With it, Qualcomm projects sales in the range of $9.2 billion to $10.2 billion. 

The San Diego, California-based company, previously Apple's primary modem supplier, said the deal will lead to more stability for its business. Licensing payments from Apple will restart in the third quarter of 2019. Qualcomm has also agreed to supply cellular modem chips to be used in future iPhones. With the legal conflict closed, the company expects its profits to swell by $2 per share as shipments of Apple devices ramp up. 

Qualcomm's business is bifurcated. Sales of the company's smartphone chips represent most of its revenue. But the biggest profits come from licensing patents it says cover all the fundamentals of 3G, 4G and 5G technology. Qualcomm charges fees to companies that tap into its vast patent portfolio. Apple's legal challenges centered on Qualcomm's licensing unit, which posted an operating profit of $674 million in the second quarter.

The legal battle's resolution is a major boon for Qualcomm. Since the accord was announced last month, Qualcomm's share price has surged more than 50 percent. Not only does the deal preserve Qualcomm's licensing model, it also potentially paves the way for Apple to use Qualcomm's 5G modems in future iPhones. Qualcomm said its 5G sales will start ramping up in 2020 as more 5G services are introduced worldwide.

"We believe the settlement is a win for both companies, and we are pleased with the result and pleased to have it behind us," Steve Mollenkopf, the chief executive of Qualcomm, said on an analyst conference call."

Source: https://www.sourcetoday.com/manufacturer-news/qualcomm-wins-nearly-5-billion-accord-apple?Issue=ESB-001_20190503_ESB 001_144&sfvc4enews=42&cl=article_2_b