In the current dispute between Apple and Qualcomm, “we see merit in both parties’ arguments, and believe mutual self-interest will prevail, making it unlikely that this dispute will result in prolonged litigation or court trials,” Credit Suisse analysts Kulbinder Garcha, Philip Wang, and Syed Talha Saleem write via Barrons.

“Apple needs Qualcomm… Apple products will continue to leverage Qualcomm’s innovations, both for standard essential patents (SEP) and for IP in components, such as battery and screen technology, just to name a few,” Garcha, Wang, and Saleem write. “Qualcomm needs to resolve this. First, as the largest mobile OEM with hardware revenues of $190 billion, Apple is simply too large to ignore. Second, given that Apple is set to gain market share in a non-growing smartphone industry, Qualcomm will be eager to settle this matter. A lack of exposure for Qualcomm means a declining total available market (TAM) over the next few years. Third, taking this to trial could result in an outcome that affects Qualcomm’s other agreements.”

“Mutual self-interest will prevail, settlement is possible. We believe, as in the agreements between Qualcomm-Nokia and Qualcomm-Samsung in 2008 and 2009, respectively, that an amenable settlement for both parties is possible. This would likely result in a major upfront payment and a heavily discounted royalty rate,” Garcha, Wang, and Saleem write. “Apple could digest a payment given its cash balances and would welcome a minimal hit to its gross margin, while Qualcomm would welcome upfront revenues. We see an upfront payment at $8 billion and ongoing rate of $5.90 per phone as possibly being acceptable to both parties.”

Read more in the full article here.

MacDailyNews Take: All along, this has been a dance over royalties, with Apple seeking more amenable terms to Qualcomm’s highway robbery to date. We expect a settlement as well, eventually (once Qualcomm is sufficiently worn down) – a settlement that benefits Apple vs. the old agreement.

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