Chinese manufacturing giant Huawei and US chip maker Qualcomm have disagreed over the licensing dispute. However, both companies finally decided to put the issue on hold as they sign a long-term agreement. Despite growing tensions between the US and China, Qualcomm and Huawei have managed to reach a compromise. According References, Huawei will have to pay Qualcomm $ 1.8 billion lump sum. This payment covers previously unpaid licensing fees. In addition, the settlement also covers a license that allows Huawei to use Qualcomm technologies.
These funds boost Qualcomm’s fourth-quarter revenue. According to Qualcomm, Q4 2020 revenue will be much higher than Wall Street expectations. Many thanks for the one time payment from Huawei. Qualcomm share price rose 13% in after-hours trading. The company said so has resolved the licensing dispute with Huawei.
Huawei is still banned from buying Qualcomm brands
Qualcomm said that although Huawei is still banned from buying Qualcomm brands, The latter has now resumed the payment of wireless technology licensing fees. Thus, the transaction does not mean that Huawei’s ban is no longer active. Qualcomm is tough when it comes to licensing disputes – Apple’s case last year is easy to remember.
Qualcomm CFO Akash Palkhiwala told Reuters in an interview
“We are seeing a partial impact from the delay in the release of a flagship phone. And what we have seen is a small delay that pushes some of the units from the September quarter to the December quarter for us. “
Qualcomm Q4 adjusted earnings for the fourth quarter rose from $ 1.05 to $ 1.2. Its revenue also shifted from $ 7.3 billion to $ 8.1 billion, including $ 1.8 billion from the settlement. Just like other companies, the Koranic virus pandemic hit Qualcomm hard. The COVID situation hit earnings per share of the company by about 25 cents. Basically, this is due to the sending of a smartphone by about 15% from year to year. In addition, the delay in the release of 5G smartphones (possibly from Apple) also affected the company.
Qualcomm CEO Steve Mollenkopf said
“As 5G continues to circulate, we are realizing the benefits of the investment we have made in building the most comprehensive mobile licensing program and turning the technical challenges of 5G into leadership opportunities and commercial victories.” the high end of our range, continued to run our product and licensing business, and entered into a new long-term patent license agreement with Huawei, which places us well for the rest of 2020 and beyond. “