Qualcomm bags license deals with China’s Tianyu and Haier

December 30, 2015 08:20
San Diego-based Qualcomm  gets most of its revenue from selling chips that handle wireless communications and calculating chores in smartphones. Photo: Reuters

Qualcomm Inc. has signed patent licensing deals with two Chinese smartphone makers, cementing gains in a business that provides more than half of the chip maker’s profits.

On Tuesday, the company said Beijing Tianyu Communication Equipment Co. and Haier Group, agreed to pay royalties under patent licenses that allow them to make mobile devices using 3G and 4G wireless technologies, the Wall Street Journal reports.

Qualcomm’s announcement came one day after it announced a similar deal with QiKu Internet Network Scientific (Shenzhen) Co., a joint-venture of Qihoo 360 Technology Co. Ltd. and Coolpad Group Ltd. that sells smartphones and other products.

Financial terms were not disclosed but Qualcomm said the three deals were consistent with the licensing terms set under a settlement in February with China’s antitrust agency.

Qualcomm, based in San Diego, gets most of its revenue from selling chips that handle wireless communications and calculating chores in smartphones.

But a bigger share of profits comes from licensing patents on wireless inventions.

The company’s licensing practices have prompted a series of government investigations, including probes by the US Federal Trade Commission and agencies in South Korea and Taiwan.

European authorities are investigating issues related to chip sales.

The company has said it is cooperating with the investigations and believes it is acting legally.

The China settlement, which followed an investigation that stretched for 18 months, had been expected to trigger a stream of licensing agreements with Chinese handset makers.

But Qualcomm in early November cited continuing delays in reaching licensing deals in China when it reported a 44 percent drop in profit in the fiscal fourth quarter and issued disappointing earnings guidance for the year.

Those disclosures sent Qualcomm’s shares down 15 percent in a single trading session.

Earlier this month, Qualcomm reached a patent-licensing deal with Xiaomi Corp., one of China’s largest smartphone makers.

The company had previously disclosed deals with China’s Huawei Technologies Co., TCL Communication Technology Holdings Ltd. and ZTE Corp.

Qualcomm has also been in talks with Lenovo Group Ltd., people familiar with the matter have said, but no deal has been announced.

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