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It did not take long for Tim Cook to receive information about the far-reaching settlement between Apple and Qualcomm when it called for the results of the second quarter of 2019. Cook said that Apple was happy to put the dispute behind.
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When asked about the settlement, Mr. Cook explained that Apple was "very pleased" to have a multi-year supply contract for the chipset with Qualcomm. In addition, Cook stated that the part of the agreement relating to a direct license agreement was important to both companies involved:
We are happy to leave the litigation behind us and that all disputes around the world have been filed and settled. We are very pleased with a multi-year supply agreement and a direct license agreement with Qualcomm, which was important for both companies. We are satisfied with the resolution.
Cook was then directly questioned about the impact of the settlement between Apple and Qualcomm on his iPhone 5G modem projects. Unsurprisingly, Mr. Cook did not address 5G directly in the iPhone, but acknowledged that new technologies such as 5G are expensive, they represent the sum of all the costs that concern Apple.
As you can guess, this is an issue that I will be fighting for. We look at a lot of different technologies and try to pick the right time for things to come together and get them into the products as soon as possible.
From a cost perspective, some technologies have experienced cost pressures over the last two years. On the other hand, a number of things go in the other direction, such as DRAM and NAND. It is difficult to predict what will happen next, but all of these factors are what matters from a price point of view.
Finally, Luca Maestri, Apple's CFO, was asked to add color to the financial side of the Qualcomm settlement. Maestri, however, said that as part of this deal, Apple and Qualcomm had agreed to not share any financial details:
As Tim explained, we entered into this compressive agreement. We agreed not to share the financial terms of the agreement. And we plan to honor that. What you see in our gross margin guide perfectly includes the settlement with Qualcomm.
Read Apple's full release on the results here. You can listen shortly after the call with Apple Podcasts.
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