Qualcomm Signs New Patent Licensing Deals In China
Qualcomm announced today that it has inked new patent licensing deals in China with smartphone manufacturers Beijing Tianyu Communication Equipment and Haier Group. The San Diego-based chipmaker has made a series of similar agreements over the past two months as it recovers from an antitrust investigation by the Chinese government.
Financial terms for its latest deals were undisclosed, but Qualcomm stated that its licensing agreements with Tianyu and Haier adhere to the terms of a rectification plan it submitted to China’s National Reform and Development Commission earlier this year after the government found that it had violated national antimonopoly laws.
Qualcomm said at the time that it disagreed with the results of the investigation, but agreed to pay a $975 million penalty.The fine seems huge until compared to the $7.57 billion in royalties from patent agreements Qualcomm made in China last year. More importantly, the settlement allows Qualcomm to continue selling chips to electronic companies.
The investigation hurt Qualcomm’s fourth-quarter earnings because many of its licensees in China wanted to wait for a settlement before negotiating their contracts, but the company said 2015 was a “transition” year and it is optimistic about its recovery next year. Chief executive officer Steve Mollenkopf said earlier this month that Qualcomm is currently in talks with all of China’s major handset makers and plans to announce deals soon.
One of the main concessions Qualcomm made as part of the settlement is that it will calculate royalties based on 65 percent of the net selling price of devices, instead of its wholesale price. According to the Wall Street Journal, Qualcomm has agreed to charge licensees 3.5 percent for devices that uses only its patented 4G technology, and 5 percent for ones that use 3G only or a mix of both 3G and 4G.
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