Huawei will pay $1.8 billion to obtain Qualcomm patent authorization
Qualcomm recently released its fiscal 2020 Q3 quarterly earnings report. Although revenue and net profit fell sharply, it was still better than analysts expected, so the stock price soared.
The decline in Qualcomm’s revenue and net profit this time is mainly due to the decline in smartphone shipments affected by the coronavirus epidemic. This is an objective problem so analysts did not demand it.
The financial report shows that Qualcomm’s revenue for this quarter was $4.89 billion higher than analysts’ expectations of $4.8 billion. Of course, the revenue level was much lower than the $9.6 billion in the same period last year.
In terms of net profit this quarter, $845 million was higher than the $486 million expected by analysts and the market, and it was also much lower than the $2.149 billion profit in the same period last year.
The most important reason for the surge in Qualcomm’s stock price this time should be that Qualcomm and Huawei reached a cooperation agreement, which has been debated for a long time before finally being reached.
According to Qualcomm’s statement, Huawei will pay Qualcomm a one-time patent fee of $1.8 billion, and Huawei will obtain the right to use multiple patents held by Qualcomm.
After Huawei and Qualcomm reached a cooperation agreement, it also means that Qualcomm has reached an agreement with all major mobile phone manufacturers, which is good news for Qualcomm.
Although the US Department of Commerce prohibits Huawei from purchasing Qualcomm’s chips, it is permitted in terms of patent authorization, just as Huawei also authorized US companies.
Qualcomm said that it is very happy to reach cooperation with Huawei, but the company will continue to appeal to the US Federal Trade Commission and other agencies to overturn the antitrust ruling.