Qualcomm strikes licensing deals with Chinese smartphone leaders

Qualcomm will license its chip technology to two of China’s biggest smartphone makers, Vivo and Oppo. Oppo is the world’s fourth-largest smartphone maker behind Samsung, Apple and Huawei, according to IDC, which ranks Vivo as the world’s fifth-largest smartphone maker.
The chipmaker has granted Oppo and Vivo royalty-bearing patent licenses to develop, manufacture and sell 3G W-CDMA, CDMA2000 and 4G LTE devices for use in China. The patents also cover “3-mode” LTE-TDD, TD-SCDMA and GSM devices.
“Qualcomm is committed to the continued success of China’s wireless industry,” said Alex Rogers, SVP and GM for Qualcomm’s technology licensing business, which generates a significant portion of Qualcomm’s revenue and more than half of its earnings.
The company noted that the terms of both licenses are “consistent with the terms of the rectification plan submitted by Qualcomm to China’s National Development and Reform Commission.” That plan requires Qualcomm to offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents. “Essential” patents are those covering fundamental wireless technologies that are used by almost all mobile devices to ensure interoperability.
For licenses of Qualcomm’s 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm charges royalties of 5% for 3G devices (including multimode 3G/4G devices) and 3.5% for 4G devices (including 3-mode LTE-TDD devices) that do not implement CDMA or WCDMA, in each case using a royalty base of 65% of the net selling price of the device, according to the terms of its agreement with the Chinese government.