Huawei agrees to pay Qualcomm US$1.8 billion

Joanna Estrada
August 1, 2020

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. That's likely a reference to Apple's widely expected 5G-capable iPhone; Qualcomm past year replaced Intel as the 5G silicon vendor for the iPhone maker.

Qualcomm said Wednesday that it expects global smartphone sales to fall by 15 percent over the next three months, due to the coronavirus. Analysts surveyed by Zacks had expected revenue of $5.1 billion. Meanwhile, a patent deal with Huawei is adding an extra $1.8 billion to the company's revenue, with the combined news sending shares soaring in after-hours trading.

"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 CEO Steve Mollenkopf said in a prepared statement. The company has said it's the first to field 5G parts and aims to gain back market share that was eroded as the previous 4G network technology matured and its customers began to look elsewhere. "And so what we've seen is a slight delay that pushes some of the units out from the September quarter to the December quarter for us", he said.

In the fiscal third quarter, Qualcomm said adjusted revenue was little changed from a year earlier at $4.89 billion.

Analysts have been speculating that the launch of new 5G iPhones could be pushed back slightly from Apple's usual schedule.

Nevertheless, Qualcomm's strong non-Apple chip sales and the Huawei settlement payment should make its FQ4 very lucrative. Qualcomm now has more than 660 devices announced or in development with its 5G Snapdragon semiconductors, up from 375 devices in March.

It also agreed to a new long-term licensing agreement with the Chinese firm that should bring in about $1.8 billion in revenue in the fourth quarter. Earnings are forecast at $2.12 to $2.32 per share.

Qualcomm announced financial results after markets closed.

In its fourth fiscal quarter, that agreement will pay Qualcomm $1.8 billion plus whatever royalties come from the settlement, Qualcomm said. Its share price ended Wednesday at $93.03 but surged to $103.78 in extended trading.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER