The two companies were able to reach a settlement so that the iPhone maker will once again use Qualcomm modem chips. As a result, the company’s shares jumped to $70.45 in regular trading, and then reached $75.25 in after-hours trading.
The settlement also includes a six-year patent license, as well as a payment from Apple to Qualcomm for an undisclosed amount.
“This is a big win” for Qualcomm, said Christopher Rolland, an analyst at Susquehanna Financial Group, according to Reuters.
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 that Apple owed Qualcomm around $31 million for infringing on three of the mobile chip maker’s patents.
In addition, Intel, which had been Apple’s sole iPhone chip supplier for the past year, announced after the settlement that it was exiting the modem chip business to focus its 5G efforts on other devices. Its shares rose 2.7 percent in after hours trade.
“Intel isn’t trading lower because modems represent such a small portion of revenues for the company,” said Patrick Moorhead of Moor Insights & Strategy.
Qualcomm and Apple did not say when their new agreement would begin, but since Intel does not expect to have a 5G chip ready for phones until next year, Bernstein analyst Stacy Rasgon said the tech giant will likely use Qualcomm to fulfill that need.
But there is no guarantee that Qualcomm will be Apple’s sole supplier. Apple executives testified earlier this year at a trial between the U.S. Federal Trade Commission and Qualcomm that Apple has met with Samsung and MediaTek about using their 5G modems for 2019 iPhones.
Apple also recently moved its modem engineering efforts into the same group that develops its proprietary chips, which could be a sign that the company is looking to create its own modem.