Over the last two years, Apple and Qualcomm, a company that makes communications chips and holds a number of critical patents, have been locked in a legal battle. But as opening arguments were being heard in court overnight, the two giants reached a settlement. And that could change the face of the next iPhone.
On one side, Apple said Qualcomm was abusing its market position and charging exorbitantly high rates for its technology. That led to some hefty fines.
Qualcomm countered saying Apple had been stealing its tech and won a couple of victories in Germany and China that meant Apple had to stop selling certain iPhone models in those countries.
As a result of this legal wrangling, Apple resorted to exclusively using communications chips from Intel. Although that gave Apple a way to keep making iPhones there was a cost. Intel's chips aren't as fast as Qualcomm's and Intel is still some time away from having a 5G chipset ready for the market.
Striking a new deal with Qualcomm resolves both those issues for Apple.
As part of the surprise settlement, Apple has entered into a six-year supply agreement with Qualcomm with an option for another two.
With 5G becoming part of the smartphone and tablet landscape, this is a significant win for Apple. Although it has used both Intel and Qualcomm chips for some time, the dependence on Intel for exclusive supply put it behind Samsung, Huawei and other companies that have been able to develop 5G products.
This agreement seems like a win-win-win situation.
Apple gets to break its dependence on a single chip maker and Qualcomm gets to do business with a large customer. It also means both companies avoid having to spill secrets in court and spend millions more in legal costs.
Consumers also win. 5G is coming and I suspect it will be deployed on mobile phone networks faster than many people expect. Having a 5G ready handset means the next generation iPhone will be ready for that major change.
Update: As a result of the announcement of the deal between Qualcomm and Apple, Intel has announced that it is exiting the 5G modem market and will focus its 5G efforts on network infrastructure.