Qualcomm scored a small victory in the opening quarter of its fiscal 2019, striking a short-term licensing agreement with Huawei which at least temporarily settled one of two major disputes with its top customers.
In an earnings call for the quarter (covering the three months to 30 December) CFO George Davis revealed Huawei agreed to pay quarterly installments of $150 million until end-June to cover a portion of royalties due. An initial payment was made during Qualcomm’s fiscal Q1, though negotiations for a long-term settlement continue.
The agreement with Huawei marks Qualcomm’s latest resolution of a customer dispute. In January 2018, it inked an amended patent deal with Samsung which included the latter’s withdrawal from a Korea Fair Trade Commission probe into the chip giant’s licensing practices.
A series of high-profile rows with Apple remain ongoing, but Qualcomm CEO Steve Mollenkopf hinted an end may be in sight: “We continue to believe that over the course of 2019, we will reach a resolution on the key outstanding issues in our disputes with Apple through settlement or litigation, and we are prepared for both outcomes.”
Mollenkopf added the company remains engaged in settlement talks with the US Federal Trade Commission: this week both parties presented closing arguments in a court case relating to Qualcomm’s business practices.
While the company believes it made strong case at trial, the CEO said Qualcomm would be willing to accept a deal to “remove this risk from the table”.
Weakness in the smartphone market was reflected in a 22 per cent year-on-year drop in chip shipments to 186 million units.
Revenue fell 20 per cent to $4.8 billion. Net income of $1.1 billion compared with a loss of $6 billion in fiscal Q1 2018.Subscribe to our daily newsletter Back