‘Lot of Tension Removed’ Through Settlement With Apple, Says Qualcomm CEO

Qualcomm expects to record revenue gains in Q3 ending June 30 of between $4.5 billion and $4.7 billion from its global settlement with Apple, said finance chief Dave Wise on a fiscal Q2 call Wednesday. The gains include a one-time “cash payment” from Apple and the “release of related liabilities,” plus “go-forward royalties,” he said. Apple will take a six-year license from Qualcomm with an option for two more years, and will source Qualcomm chipsets for a “multiyear” term, said CEO Steve Mollenkopf. The settlement is “a significant milestone, as it is Qualcomm's first patent license agreement directly with Apple,” rather than through Apple’s contract manufacturers, he said. “There's a lot of tension removed out of the system as a result of these settlements,” he said. “I really like the opportunity to have the two teams just working together on products in the future.” Qualcomm downgraded its forecast for calendar 2019 smartphone chipset sales by 50 million units to 1.85 billion units “due to continued weakness in China and a lengthening of the handset replacement cycle, potentially reflecting a pause in advance of 5G rollouts,” said Wise. “We now expect global handset units to decline slightly year over year.” Global smartphone shipments declined 6.6 percent to 310.8 million units, “a clear sign that 2019 will be another down year,” said IDC Tuesday (see 1905010173).