Qualcomm and Samsung announced a strategic agreement covering a wide range of technologies and mobile devices alongside an amended patent deal which will see the smartphone giant withdraw from a Korea Fair Trade Commission (KTFC) probe into the chip giant’s licensing practices.
The deal “expands the companies’ longstanding relationship as technology and business partners this year and beyond, through the transition to 5G”, Qualcomm said in a statement.
Cristiano Amon, president of Qualcomm, said the announcement “underscores the importance of our longstanding strategic relationship with Samsung in driving core mobile technology into many different segments.”
Despite having its own chip business, Samsung is a long-standing customer of Qualcomm, with the relationship extending Qualcomm-powered versions of Samsung’s flagship smartphones. But Qualcomm also came under the regulatory spotlight in Samsung’s home market, South Korea, with an investigation into its patent licensing regime, so the removal of Samsung’s interventions is significant.
Qualcomm said the patent deal is “consistent with Qualcomm’s global handset-level licensing practices”. This is important because this model – where royalties are based on whole device price rather than on a silicon level – is a key issue in an ongoing dispute between Qualcomm and Apple.
Alex Rogers, EVP and president, Qualcomm Technology Licensing, said: “We believe this amended agreement provides the foundation for a long-term stable relationship with Samsung following the KFTC investigation.”
The announcement came as Qualcomm reported a loss for the quarter to 24 December 2017 of $6 billion, compared with a profit of $0.7 billion in the comparable period of 2016: revenue of $6.1 billion was up 1 per cent.
During the recent quarter, the company recorded a $6 billion charge related to changes in the US tax system, plus a $1.2 billion charge for a fine imposed by the European Commission.
Qualcomm’s licensing revenue of $1.9 billion, down from $1.4 billion, continued to be impacted by the Apple dispute and its device manufacturer partners, as well as “the previously disclosed dispute with another licensee”. Some $740 million in royalties from these companies were recorded in the prior-year figures.
For its semiconductor business, revenue of $4.7 billion was up 13 per cent. It noted the performance was above expectations, “driven primarily by the higher unit volume on a build ahead for a customer’s flagship launch” – most likely Samsung’s Galaxy S9.