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Financials Reports

Chinese royalties flow again for Qualcomm

One of the main motivations for Qualcomm to come to a settlement with Chinese antitrust authorities last year was to restart the flow of patent licensing revenues from the country’s manufacturers. Many companies had withheld payments until the new terms were negotiated, and even when the truce was agreed, Qualcomm warned that it still might take a long time to get the royalties flowing again.

It seems to have opened the floodgates now though, judging by the recent string of announcements of new deals, and analysts estimate that over 90% of Chinese companies are now in compliance with Qualcomm’s terms – reduced as those may have been by the 2015 settlement.

Just ahead of its quarterly results announcement, Qualcomm said it had signed a licensing pact with handset maker Yulong, which is the one-hundredth firm to accept the terms of the Chinese rectification plan. Yulong, an indirect wholly owned subsidiary of Coolpad, has been granted a royalty-bearing licence for patents related to W-CDMA, CDMA2000, LTE and tri-mode GSM/TD-SCDMA/TD-LTE devices.

Hard on the heels of the Yulong announcement came another one, with Hisense, which CEO Hongxin Liu said would enable his firm to “design powerful communication, entertainment and productivity devices for consumers across all demographics in China”.

In another sign of progress for Qualcomm’s licensing business, the firm has resolved its licensing dispute with LG of Korea. “We are pleased to have resolved our dispute with Qualcomm through good faith negotiation and mutual respect,” said Skott Ahn, president and CTO of LG Electronics.

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