US telecommunications equipment maker Qualcomm and smartphone maker Apple announced on Tuesday they had dropped all ongoing litigation and come to agreement on a global chipset supply deal.
The two sides were locked in an antitrust battle related to modem chips for mobile devices, which began in early 2017. Court proceedings started on Monday and were expected to last for weeks.
In an illustration of just how much of a surprise the news was to investors, shares of Qualcomm rose more than 20% on the news, marking the company’s best day on Wall Street since 1999.
The decision follows widely covered comments from Apple competitor Huawei’s CEO that it would be “open” to selling Apple its modem chips. News reports noted that Apple would likely not pursue the purchase of Huawei’s chips, but that its legal battle with Qualcomm represented one reason it might.
Apple had argued in the case that Qualcomm had abused its market position to charge unreasonably high prices for licensing of key technology. But the creator of the smartphone had come under increasing pressure from Qualcomm for alleged patent violations.
Under the terms of the settlement, Apple has agreed to pay an undisclosed penalty fee to Qualcomm.
The six-year license agreement includes a multi-year chip supply agreement, which will likely see tensions between the two firms subside for the time being.