Sources: Apple was concerned about Intel as a sole supplier for its 5G iPhone planned for next year, prompting the settlement with Qualcomm (Nikkei)

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PALO ALTO, U.S./TAIPEI — Apple and Qualcomm on Tuesday reached a settlement to end a two-year multibillion dollar battle over patent royalties in a move which almost immediately prompted U.S. chip giant Intel to announce it was pulling out of the 5G smartphone chip market.

The two U.S. companies have been negotiating details of the settlement for weeks, sources told the Nikkei Asian Review. They have agreed to drop all litigation worldwide and struck a six-year licensing agreement, that will ensure the launch of the first 5G iPhone in 2020. The settlement included an undisclosed payment to Qualcomm by Apple, which several weeks ago asked its suppliers to begin testing the chipmaker’s 5G modems, sources said. 

Intel followed up news of the settlement by announcing its exit from 5G chips and raising questions over the future potential of the next generation technology, which the smartphone industry is hoping will help to revive a market suffering its third consecutive year of decline. 

The U.S. giant told Nikkei Asian review in a statement that there was “no clear path to profitability and positive returns in the smartphone modem business. That said, 5G remains a strategic priority across Intel and we continue to invest in our 5G network infrastructure business.” It also said it