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Qualcomm’s complicated relationship with China is continuing as the mobile chip maker this week announced several patent licensing deals with tech companies inside the country.
Qualcomm officials on Dec. 29 said the vendor had signed 3G and 4G patent license agreements with China-based companies Beijing Tianyu Communications Equipment Co. and Haier, which makes consumer appliances. Both companies were granted royalty-bearing patent licenses to make and sell 3G WCDMA and CDMA2000 (including EV-DO) and 4G LTE (including three-mode GSM, TD-SCDMA and LTE-TDD) subscriber units in China.
Those announcements came a day after the chip maker said that QiKu Internet Network Scientific Co. signed a similar royalty-bearing agreement. QiKu, a joint venture between Chinese companies Qihu and Coolpad that is less than a year old, offers such products and services as operating systems, smartphones and other connected devices.
Earlier this month, Qualcomm signed a patent licensing agreement with fast-rising Chinese smartphone maker Xiaomi, enabling the vendor to build and sell smartphones that connect to cellular networks via 3G or 4G, and to pay royalties to Qualcomm for the devices they sell.
Over the past several months, the chip maker also has signed deals with such Chinese vendors as ZTE and Huizhou TCL Mobile Communications.
No financial details of the most recent patent license agreements were released, but Qualcomm officials said that all three comply with a new licensing plan worked out with Chinese regulators as part of a lengthy investigation that was completed earlier this year.
“China’s mobile ecosystem is flourishing, benefiting Chinese companies, employees and consumers alike,” Eric Reifschneider, senior vice president and general manager of the Qualcomm Technology Licensing business unit, said in a statement. “Qualcomm is pleased to have helped Chinese companies for more than a decade to establish themselves among the top manufacturers in the mobile industry.”
Qualcomm’s business in China was a key part of what has become a volatile year for the world’s largest mobile chip maker that also included increased competition from the likes of Apple and Samsung, controversy around its Snapdragon 810 chip after Samsung declined to use it, pressure from an activist investor to restructure and break the company in two, disappointing financial numbers and investigations from a range of regulatory bodies worldwide.
Qualcomm in February agreed to pay a $975 million fine and make changes to its business practices in China to settle an antitrust investigation by the country’s National Development and Reform Commission (NDRC) that spanned more than 14 months. At the same time, the company has been working with Chinese device OEMs in the country to reach licensing agreements in line with the NDRC settlement, and has been pursuing others that Qualcomm officials said have been underreporting the number of devices they’re actually selling.
In statements, officials with Tianyu, Haier and QiKu all noted their respect for Qualcomm’s intellectual property.
“Tianyu recognizes Qualcomm as a global technology leader and innovator, and respects the value of the license we have obtained to Qualcomm’s Chinese wireless IPRs,” CEO Rong Xiuli said.
Qualcomm Signs Patent License Deals With 3 Chinese Vendors
The new licensing deals also come a couple of weeks after Qualcomm officials and directors announced that they had decided against breaking the company in two following a months-long review of the vendor’s corporate structure. Investor Jana Partners earlier this year had urged Qualcomm to considering options for increasing profitability and returning more money to shareholders, including possibly separating the company’s chip-making and licensing operations.
The company in July cut $1.4 billion in expenses—including slashing the workforce by 11 percent, changing executive compensation policies and restructuring the board in line with Jana desires. However, CEO Steve Mollenkopf said when announcing the decision to keep Qualcomm intact that “the strategic benefits and synergies of our model are not replicable through alternative structures. We therefore believe the current structure is the best way to execute on our strategy to build on our position in the ecosystem and deliver enhanced performance and returns.”
Qualcomm’s businesses are tightly intertwined. The chip-making business drives revenues at the company, while the licensing unit generates the most profits, which support the R&D that results in more products that can be licensed.
Qualcomm may have settled the antitrust investigation with Chinese officials, but the company still faces similar probes in such regions as the United States, South Korea and the European Union.
The vendor also is looking to bounce back from the problem of Samsung refusing to use the Snapdragon 810 system-on-a-chip (SoC) for its Galaxy S6 smartphone with the upcoming release of its Snapdragon 820, which will begin appearing in devices next year. Samsung reportedly will use the SoC in some of its upcoming Galaxy S7 smartphones.