Apple’s Settlement With Qualcomm May Have Cost As Much As $6 Billion

The legal battle between Apple and Qualcomm is over, and UBS is estimating the iPhone maker paid Qualcomm in the neighborhood of between $5 billion and $6 billion to end the dispute, according to a report by CNBC.

In addition, UBS Analyst Timothy Arcuri said on Thursday (April 18) that Apple probably also agreed to pay Qualcomm between $8 and $9 per device in patent royalties. The estimate is based on Qualcomm’s guidance that states it estimates an increase of $2 per share after the settlement.

The settlement comes after a jury in federal court in San Diego last month sided with Qualcomm in its long-running patent court battle with Apple. The jury found Apple owed Qualcomm around $31 million for infringing on three of the mobile chip maker’s patents.

The numbers mean Apple had to pay dearly to end the dispute, which has been strewn across several continents and potentially hampered Apple’s future ability to release a 5G phone, as well as threatened the Qualcomm licensing model that brings in more than 50 percent of profit for the company.

The news has buoyed stock in both companies: Qualcomm is up more than 38 percent and Apple raised 2 percent.

The settlement was announced on Tuesday (April 16), and it included a lump one-time payment and an apparent agreement that would allow for both companies to work together in the future.

Arcuri wrote that the resolution was “a solid outcome for Qualcomm and certainly better than the $5 (royalty payment) assumption we had been making.”

A royalty payment of between $8 and $9 is an increase over the $7.50 Apple was previously paying Qualcomm. Qualcomm CEO Steve Mollenkopf, when asked about the size of the payment by CNBC, declined to provide a figure.

“Well, a deal like this, there’s a lot of value back and forth, and it’s just best to keep it confidential,” he said.