Qualcomm strikes patent licensing deal with Huawei
US mobile phone chip maker Qualcomm has signed a long-term agreement with Chinese technology company Huawei, ending a patent dispute between the pair.
Qualcomm confirmed on Wednesday, July 28, that it will net a $1.8 billion lump-sum payment from the Chinese company to cover previously unpaid licensing fees, resolving the long-running dispute between the two companies.
The settlement, which was paired with a multi-year agreement to license Qualcomm’s patented technologies for Huawei use, comes amid ongoing tensions between the US and China.
This agreement ends a period of protracted uncertainty for Qualcomm, as Huawei had been withholding revenues amid its objections to the US company’s licensing practices.
According to data by Counterpoint Research, Huawei continues to be the best performer in the Chinese market, grabbing 46% market share in the past quarter, while a third of new smartphones sold during this period in China were 5G-capable.
Following the announcement, Qualcomm’s shares soared to a record high, jumping by more than 13% to $105.35 after it posted strong revenue projections, according to a report in The Financial Times. The California-based company projected that adjusted revenues could be as high as $6.3 billion in the current quarter.
In a statement, Steve Mollenkopf, Qualcomm’s chief executive, said: “As 5G continues to roll out, we are realising the benefits of the investments we have made in building the most extensive licensing programme in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins.”
He added that the “new long-term patent licence agreement with Huawei positioned the company well for the balance of 2020 and beyond”. In the third quarter of the year, ending June 28, Qualcomm registered a net income of $845 million, or 74 cents a share, down from $2.15 billion, or $1.75, in the year-earlier quarter.
Last year, Qualcomm settled another bitter, long-running dispute over microchip patent licensing with Apple, collecting at least $4.5 billion from the settlement.
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