Qualcomm signs new IP licencing deal with Huawei despite US-China trade tensions

The cash will come in handy after COVID kicked a colossal hole in Q3 revenue

Huawei has agreed to pay US chipmaker Qualcomm $1.8bn to settle a long-standing dispute over infringement of the American firm’s patents.

Qualcomm holds patents on key smartphone components and is happy to make money by either selling products or licensing its IP. Huawei has been a customer for the latter arrangement, but Qualcomm has alleged it's withheld payments on such licenses since 2017.

In 2019 Last year, the two companies reached an interim agreement whereby Huawei agreed to pay $150m for every quarter it used the tech up until December 2018.

The new settlement revealed today along with Qualcomm's Q3 results covers all the time since that date, plus the first six months of 2020.

CEO Akash Palkhiwala told investors on the company's earnings call that the terms of the deal are “consistent with the framework of our licensing programme and incremental to the partial payments received from Huawei under the interim agreement in prior years”.

Alongside the settlement, the two companies also agreed to a multi-year deal which would allow Huawei to continue to use Qualcomm's patented technologies into the future.

Which is a win for Qualcomm, a win for Huawei and a win of sorts for Donald Trump because every Huawei handset sold into the Chinese market will put some coin in Qualcomm's pocket.

Qualcomm is not out of the woods on IP just yet.

The chipmaker is also currently dealing with a high-profile antitrust case brought against it by the Federal Trade Commission over its licensing practices. The FTC has accused Qualcomm of leveraging access to its chip products to strongarm firms to pay its licensing fees.

The case is currently under appeal after a judge ruled in the FTC's favour in May last year.

Qualcomm yesterday reported revenues of $4.89bn for its Q3, well down from the $9.64bn from the same quarter in 2019. Profits also fell about 60 per cent to $845m. The company said the coronavirus pandemic hampered smartphone sales and therefore reduced demand for its products. ®

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