Apple and Qualcomm settle a dispute over iPhone technology

Apple and Qualcomm logos

Both companies had demanded billions in compensation from one another. Apple had accused Qualcomm of charging exorbitant amounts in royalties and insisting on being paid for innovations it was not involved in.

Mobile chipmaker Qualcomm and tech giant Apple settled on Tuesday along financial dispute involving some of the technology that lets iPhones to connect to the internet.

The move ended a bitter two-year legal fight and sent Qualcomm’s stock price soaring more than 23 percent on Wall Street, its best one-day performance in nearly 20 years.

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The battle between the two technology firms was centered on the royalties that Qualcomm charges for its patented chips that enable smartphones to connect to mobile networks.

Qualcomm currently holds the most patents for chips. Apple accused the chip maker of using this dominant position to charge exorbitant prices for its chips or access to its patents.

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Apple said that Qualcomm was effectively insisting on payment for Apple innovations like touch ID or Apple Pay, which the chip maker “had nothing to do with.”

As a result, Apple said it had been overcharged by billions as a result and in the lawsuit, the tech giant sought at least $1 billion in compensation from Qualcomm.

The chip maker denied the allegations, accusing Apple of abusing its position and of taking legal action to seek lower prices and seeking $7 billion for unpaid royalties it claimed that Apple owed.

But in the end, both companies agreed on Tuesday to “dismiss all litigation” against each other worldwide. The deal includes a six-year license agreement with the option to extend for two years, and payment to Qualcomm from Apple, the companies said.

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Qualcomm came out victorious, but it still faces other potential problems stemming from its added royalty demands on top of fees it charges for its mobile chips.

The US Federal Trade Commission has accused the company’s practices of stifling competition in the mobile chip market, as part of a different case in which Apple also played a central role.

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