Sci-tech

Qualcomm inks licensing deal with Samsung, but sees 'market softness' in smartphones

Qualcomm inks licensing deal with Samsung, but sees 'market softness' in smartphones

As well as fighting battles in the U.S. and Europe (the most recent being the European Commission's blockbuster $1.2 billion fine), it is fighting a third front in Asia. But licensing revenue dropped 28 percent to $1.30 billion, weighed down by a dispute with Apple Inc.

Qualcomm's shares were little changed Wednesday afternoon despite the wireless pioneer reporting a almost $6 billion loss due to foreign fines and changes in federal tax laws.

"Consistent with what others have been reporting, we are forecasting some short-term end market softness, driven by larger than typical sequential correction in orders from a fin modem customer and near term smartphone trends in China", said Qualcomm chief executive Steve Mollenkopf yesterday on the company's quarterly earnings call with investors, according to a Seeking Alpha transcript of the event.

Revenue rose 1.2 percent to US$6.07 billion and exceeded analysts' estimates of US$5.93 billion. Wall Street is expecting earnings of 85 cents a share on revenue of $5.58 billion.

The Apple dispute has put significant pressure on Qualcomm Technology Licensing (QTL), Qualcomm's licensing division, which accounts for a significant portion of Qualcomm's earnings.

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"The announcement today underscores the importance of our longstanding strategic relationship with Samsung in driving core mobile technology into many different segments", said Cristiano Amon, president, Qualcomm Incorporated.

On the subject of antitrust concerns: Qualcomm announced a new patent cross-licensing agreement with Samsung yesterday to collaborate on transitioning to 5G.

Qualcomm and Samsung also announced a multiyear "strategic relationship" of cooperation in various technologies and mobile devices.

Qualcomm is in the midst of closing its long-pending $38-billion deal to buy automotive chip maker NXP Semiconductors.

As a part of the new developments, Samsung will be withdrawing its interventions in Qualcomm's appeal against the Korean Free Trade Commission (KFTC) decision that was alleging the violation of competition laws by the San Diago-based chipmaker.