Qualcomm signs new patent deals in China

Qualcomm, whose fourth-quarter earnings were hard-hit by an antitrust investigation by the Chinese Government, announced today that it has signed new patent deals in China with smartphone manufacturers Beijing Tianyu Communication Equipment and Haier Group. Since the beginning of November, Qualcomm has also announced deals with QiKu, a joint venture between Qihoo 360 and Coolpad, Xiaomi, Huawei, TCL Communication Technology Holdings, and ZTE.

Investigation

The investigation results were contested by Qualcomm, but finally it came to an agreement to pay a $975 million (Dh3.58 billion) penalty, which might seem massive until compared to $7.57 billion earned in patent royalties by Qualcomm in China last year. Qualcomm is calling 2015 a transition year and seems optimistic of the year to come. Chief Executive Officer Steve Mollenkopf said earlier this month that Qualcomm is in talks with all of China’s major handset makers and plans to announce deals soon.

Royalties

One of the main agreements Qualcomm made as a result of the investigation is that it will calculate royalties based on 65 per cent of the net selling price of devices, instead of its wholesale price. According to the Wall Street Journal, Qualcomm has agreed to charge licensees 3.5 per cent for devices that use only its patented 4G technology, and 5 per cent for ones that use 3G only or a mix of both 3G and 4G.