The apparent bad blood between the two companies prompted Yahoo Finance Editor-in-Chief Andy Serwer to ask Qualcomm CEO Steve Mollenkopf about the nature of the dispute and the settlement on an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
“It seemed like there was a lot of bad blood between [Apple and Qualcomm],” Serwer said. “I mean, were you guys bitter enemies and now you toss that aside?”
“Effectively, yes,” said Mollenkopf. “I mean, and I would say not the bitter enemies part. Look, there's a lot of money that goes back and forth. And I think we both were able to resolve that. And now the focus is really on products.”
On the day of the settlement, Qualcomm’s shares jumped 23%, their biggest gain in 19 years. The dispute between Apple and Qualcomm related to royalties that the latter company charged Apple and others for technology used in cellular phones. Because the technology became ubiquitious, Qualcomm charged royalties to mobile phone makers even if they didn’t use its chips.
The practice drew the ire of not only Apple but also the FTC, which sued Qualcomm in January 2017 for allegedly using anticompetitive tactics.
‘The companies have turned the page’
Apple had a big incentive to work out its problems with Qualcomm: it needed a 5G chip that the latter company produces.
Qualcomm makes processing chips for phones and is on the frontier of making 5G chips. Consumers will need new phones with 5G chips in order to access the network, which promises lightning-fast speeds that will let you download an entire movie in mere seconds rather than minutes. Mollenkopf sees a productive relationship with Apple in this sector going forward.
“I'm very happy that that's now 100% of the discussion between the companies, which is, how do we get these two great engineering teams together and create products?” Mollenkopf told Serwer. “That's a much more natural discussion between the two companies and something I enjoy much more than the other part. But we got through it. It's just business. And now we're into the product part.”
In addition to settling its dispute with Qualcomm, Apple also recently acquired Intel’s smartphone modem chip business for around $1 billion. So, it is plausible that the tech giant could begin to develop its own 5G chips. For now, though, the partnership between Qualcomm and Apple appears productive.
“Clearly, the companies have turned the page, and I applaud that,” said Mollenkopf. “I think it's great.”
Calder McHugh is an Associate Editor at Yahoo Finance. Follow him on Twitter:@Calder_McHugh.