Qualcomm and Huawei have agreed a multi-year patent cross-licence, with Qualcomm also buying some Huawei US patents. No financial terms were disclosed, and the deal still needs regulatory approval.
Qualcomm (NASDAQ: QCOM) and China’s Huawei announced a multi-year patent cross-licence before the US open today. Qualcomm, which earns royalties by licensing wireless patents, is separately buying certain Huawei US patents.
Qualcomm closed Friday at $184.87, up 1.53% on the day. That still left the shares 8.47% below their $201.97 close on the 25th of September. The lowest close of the past three months was $147.61, on the 31st of July. The US session opens at 2:30pm UK time, so there is no price reaction to the news yet.
The companies said in a joint release, issued at 7:53am UK time, that the licence covers 5G, compute, AI and networking. A cross-licence gives each side the right to use the other’s patents. The patents Qualcomm is buying span compute, AI, networking and other areas.
John Han, executive vice president and general manager of Qualcomm Technology Licensing, framed it as validation of the company’s licensing business:
“This agreement reaffirms industry recognition of Qualcomm’s 5G technology leadership and the success of Qualcomm’s 5G SEP licensing program.”
John Han, Qualcomm
The release gives no value for the deal, and closing follows regulatory approvals. It said the terms reflect FRAND principles, meaning fair, reasonable and non-discriminatory licensing. Bloomberg reported the deal is subject to US Federal Trade Commission review under the Hart-Scott-Rodino rules.
A Huawei spokesperson said the company expects its overall patent-licensing contract value to exceed $6.9bn following the deal. The release gives no value for the deal itself.
Huawei’s Chief IP Officer, Alan Fan, said the agreement shows the value of Huawei’s innovations and recognises Qualcomm’s foundational contributions to modern communication technologies. Qualcomm licensed the patents underpinning Huawei’s LogicFolding chip-design method, at a time when Huawei is hampered by US export curbs.
Qualcomm’s next earnings are due on the 4th of November after the close, with an EPS estimate of $1.47. Last quarter it reported EPS of $1.53 against a $1.54 estimate.
