American chip manufacturer Qualcomm strikes licensing agreement with China’s leading smartphone manufacturer Huawei – at $1.8bil a long-term patent licensing deal has been agreed to by both parties.
Qualcomm and Huawei Licensing Dispute
A two-year legal dispute between Qualcomm and Huawei has been concluded as a global patent licensing deal has been struck between the two multinationals. In light of the new signing, the Chinese giant will pay a sum of USD 1.8bil in order to make up for royalty payments owed to Qualcomm in 2019 and the first half of 2020.
The patents in question is in relation to 5G technology – an opportunity of which Qualcomm hopes to capitalise on.
‘As 5G continues to roll out, we are realising the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,’ said Qualcomm CEO Steve Mollenkopf.Qualcomm
Qualcomm’s position in the smartphone chip market is almost unparalleled – smartphone makers contracting Qualcomm as a supplier pay patent licensing fees based not on the value of the chip but the value of the smartphone itself. As a result Qualcomm boasts as many as 130,000 patents in its patent portfolio and according to Mollenkopf, the company has more than 100 patent licensing deals in relation to 5G technologies.
Qualcomm’s Legal Battle with Apple
The large royalties charged by Qualcomm has not gone unchallenged by smartphone companies. In 2017, Apple took Qualcomm to court as the Californian-based company disagreed with Qualcomm’s business practice in charging licensing fees based on the total value of the smartphone. Qualcomm’s questionable practices such as cutting off customer’s access to chips should they refuse to pay licensing fees gave Apple greater confidence in entering a legal battle with Qualcomm.
‘The issue that we have with Qualcomm is that they have a policy of no license, no chips. This is, in our view, illegal,’ said Apple CEO Tim Cook.CNBC
However, in early 2019 Apple lost the litigation. The American smartphone giant paid USD 4.5bil to Qualcomm in ending the legal dispute between the two companies. Both parties are reported to have entered a six year global patent licensing agreement which will see Apple use Qualcomm’s 5G chips in new versions of the renowned iPhones.
Apple’s loss signals to us that Qualcomm will in the meantime remain unchallenged in the chip industry. The company’s win further cements the notion that they are unrivalled in the areas of 5G technology.
Snapdragon 690: Expansion Into the Lower-End Smartphone Market
Qualcomm is showing no signs of slowing down on its 5G chip technology as the launch of the Snapdragon 690 in June 2020 will see budget smartphones equipped with the chip in the future.
‘Driving the expansion of 5G into the Snapdragon 6-series has the potential to make 5G accessible to more than 2 billion smartphone users around the world,’ said Qualcomm president Cristiano Amon.Qualcomm
With high-end smartphones such as the OnePlus 8 and Galaxy S20 powered by Qualcomm’s Snapdragon 865, the Snapdragon 690 will allow lower to entry barriers to 5G smartphones for consumers. Qualcomm’s expansion of 5G technology could be seen as an incentive to generate greater volume of its chips in return for greater sales and a greater hold on the chip market than before.
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