Qualcomm is planning to ease licensing terms to resolve patent conflicts with mobile phone manufacturers, according to a recent report. The licensing model of the company has been termed controversial and the chip maker is finally acquiescing to pressure. This will also include the likes of Apple, with whom Qualcomm has been engaged with court battles for the longest time. With this latest development, things might finally settle down.
Qualcomm to Reduce Royalties It Charges to Phone Manufacturers – Legal Battles With Apple to End by the Close of This Year
On Wednesday, the company announced that it will reduce the royalties it charges to smartphone manufacturers. In fact, Qualcomm confirmed that it has already cut the royalties. The next day, the CEO Steve Mollenkopf reiterated his decision to sort things out with Apple. The company is aiming to fix things before the end of this year to resolve patent related conflicts and is open to both court and ‘out of court’ reconciliation. Apple has not made any comments regarding the decision right now.
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In November 2017, Qualcomm cut down the royalty rate of standard patents, including 5G, to 3.25 percent. On Wednesday, Mollenkopf stated that an agreement has already been reached with Samsung and the patent fees have been lowered.
Mollenkopf also said that the company has contacted another licensee who was reluctant to pay royalties like Apple. Qualcomm didn’t say who it was, but it is widely believed that Huawei was the tech firm.
Needless to say, Qualcomm’s patent licensing business will be affected after a reduction in patent fees. As per the chipmaker’s estimates, revenue from the patent licensing business will go down by nearly $300 million USD to $950 million USD in the quarter.
Qualcomm calculates licensing revenue based on a percentage of the selling price of a handset. Now, Qualcomm will cap the smartphone price at $400. So, even expensive phones like the iPhone X which sells for around $999 for the base model will be treated as a $400 handset in order to calculate the license fee. Qualcomm’s licensing fee bought in the bulk of its profits, but the company received a massive financial blow after a legal dispute with Apple.
Source: MyDrivers
