Despite of headwinds from Chinese regulators in the name of antitrust issues, business has finally started to brighten for Qualcomm in China. In a deal that would prove to be win-win for both parties involved, Qualcomm and Xiaomi have entered into a new 3G and 4G China patent license agreement that would see Chinese phone maker pay loyalties for Qualcomm’s 3G/4G tech.
Under the agreement, the royalties payable by Xiaomi are consistent with terms of a rectification plan submitted by Qualcomm to China’s National Reform and Development Commission (NDRC).
Qualcomm entered into a settlement with NDRC over the company’s violation of China’s Anti-Monopoly Law. The chipmaker said in November that it was facing delays in closing new licensing agreements in China and some Chinese customers were improperly withholding royalties on Qualcomm’s patents by changing the way they report sales.
This deal, however, would fill Qualcomm’s pockets for now, which has also been a point of distress for some time. Qualcomm gets more than half of its profit from licensing patents, and customers in China accounted for more than half of total revenue during the fiscal year ended in September.
Qualcomm saw the value of its shares slumping as much as one third of the value recorded in the beginning of this year. However, this deal managed to give a hike of 7 percent.
Derek Aberle, President of Qualcomm Incorporated, said –
Qualcomm is committed to the success of its partners in China as they continue to grow their businesses and we are pleased to reach this new agreement with Xiaomi. We work closely with our partners, such as Xiaomi, to push the boundaries of what’s possible and drive the advancement of the mobile industry.
Xiaomi, meanwhile, has been eyeing expansion beyond emerging markets. And in doing so, specially in wester countries, the company is likely to sign patent licensing deals with some of the key players in the telecom sector.
Lei Jun, CEO of Xiaomi said –
Xiaomi prides itself on embracing and leading smartphone innovation through its popular line of Mi devices. A license from Qualcomm will play an important role in helping us bring the newest and most innovative products to our growing customer base.