SANTA CLARA (dpa-AFX) - Chipmaker Intel Corp. (INTC) said it plans to exit the 5G smartphone modem business, with the announcement coming just hours after Apple Inc. (AAPL) and Qualcomm Inc. (QCOM) said they have settled their royalty dispute. Shares of Qualcomm are gaining more than 14 percent in Wednesday's regular trading session.
Late Tuesday, Qualcomm and Apple said they have agreed to dismiss all worldwide litigation between them. The two companies also reached a six-year license agreement, including a two-year option to extend, as well as a multi-year chipset supply agreement.
The settlement includes a payment from Apple to Qualcomm, but no details were disclosed about the payment or fees.
With the settlement between Qualcomm and Apple, Qualcomm's modem chips are likely to be used again in Apple's newest iPhone models.
Apple used to earlier rely entirely on Qualcomm's wireless modem chips for the iPhones, but in recent years, Apple has shifted to rival Intel's modem chips for newer iPhone models.
Intel said in a statement that it does not expect to launch 5G modem products for smartphones, including those planned for launches in 2020. However, the company will continue to meet current customer commitments for its existing 4G smartphone modem product line.
Intel will also assess opportunities for 4G and 5G modems in PCs, Internet of things devices and other data-centric devices. Further, the company will continue to invest in its 5G network infrastructure business.
'We are very excited about the opportunity in 5G and the 'cloudification' of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns. 5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property,' said Intel CEO Bob Swan.
Intel will provide additional details about its plans when it announces its financial results for the first quarter on April 25.
Intel, popular for its chips for computers, is focusing on its transition from being a computer-based company to a company that 'powers the cloud and billions of connected computing devices.'
Intel sees data center and Internet of Things or IoT businesses as its primary growth engines, which now contribute a significant chunk of its revenues and operating profit, helping the company to mask the negative effects from the PC segment.
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