Chipmaker Qualcomm Announces Huawei Licensing Deal

  • Chipmaker Qualcomm Announces Huawei Licensing Deal

Chipmaker Qualcomm Announces Huawei Licensing Deal

Shares jumped to a high of $106.50 in extended trading after closing at $93.03 in NY.

"We're seeing a partial impact from the delay of a flagship phone launch". Qualcomm reported third-quarter fiscal results on Wednesday. Qualcomm had projected $4.4 billion to $5.2 billion, while analysts expected about $4.81 billion. Earnings should range from $1.05 to $1.25 per share.

Huawei, which is still subject to USA government restrictions, trumped Samsung for the first time in the worldwide smartphone market in the second quarter, research Canalys said on Thursday.

Qualcomm, the world's biggest supplier of mobile phone chips, said it expects current-quarter adjusted revenue of between $5.5 billion and $6.3 billion, compared with analysts' estimates of $5.78 billion, according to IBES data from Refinitiv.

After resolving a bruising legal battle with iPhone maker Apple Inc (O:) a year ago, Qualcomm entered 2020 with a deal to resume selling chips to Apple and predicting revenue growth from 5G devices, which fetch higher chip revenue per phone for the company. Six analysts surveyed by Zacks expected $4.81 billion.

In its fourth fiscal quarter, that agreement will pay Qualcomm $1.8 billion plus whatever royalties come from the settlement, Qualcomm said.

On a per-share basis, the San Diego-based company said it had profit of 74 cents. The company said it has now signed more than 100 5G patent license agreements, including with all of the market's major players.

The chipmaker has repaired a once-broken relationship with Apple Inc. and will be returning to a role in the iPhone models debuting later this year. The company, however, has lost share in China as Huawei has focused on its home market and built devices with its own silicon.

That helped soften the blow to Qualcomm's business from the coronavirus pandemic, as the chipmaker said it expects a 15% year-over-year reduction in handset shipments during the next quarter.

Through the deal, Huawei can get complete technology patents on 5G SoC (system on a chip).

"As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins", Qualcomm Chief Executive Steve Mollenkopf (pictured) said in a statement.

Qualcomm remains the top supplier of silicon for smartphones, including 5G phones.

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