Qualcomm, LG Reach New Patent-Licensing Deal -- 5th Update
August 20 2019 - 2:07PM
Dow Jones News
By Sarah E. Needleman
Qualcomm Inc. reached a new patent-licensing deal with LG
Electronics Inc., securing its technology in a suite of wireless
devices while federal regulators continue to scrutinize its
business practices on antitrust grounds.
The San Diego chip maker said Tuesday the five-year agreement
will allow South Korea's LG to develop and sell 3G, 4G and 5G
single-mode and multimode smartphones. Although the deal's
financial terms weren't disclosed, Qualcomm said it would earn
royalties from LG and that the agreement is consistent with its
established global licensing terms.
LG ranked as the ninth-largest smartphone company world-wide by
shipments in the first half of the year, with 2.4% of the market,
according to research firm IDC.
The deal is "a win for Qualcomm because it locks up one of the
top 10 handset manufacturers in a more top-heavy market," IDC
analyst Ryan Reith said. "There are fewer and fewer brands out
there."
The agreement is also significant for LG because 5G represents a
growth opportunity for smartphone makers, as the technology enables
faster and more powerful connectivity than ever before.
Qualcomm last year said its newest chips were selected by
multiple smartphone companies including LG, which launched its
first 5G smartphone powered by Qualcomm's chips in May.
Ensuring U.S. companies such as Qualcomm lead the race to adopt
5G has become a priority of the Trump administration in recent
months, as it looks to ward off competition from China.
Representatives for Qualcomm and LG declined to comment beyond
the news release.
Qualcomm's deal with LG comes after a federal judge in May ruled
that Qualcomm had unlawfully stifled competition in the market for
wireless chips. The ruling followed a Federal Trade Commission
investigation into Qualcomm's practices of demanding licensing
agreements from companies purchasing its chips for use in wireless
devices, and its refusal to issue licenses to other chip makers
seeking to field competitive products. Qualcomm has appealed the
ruling.
LG was among companies that during the FTC's case called
Qualcomm's practices anticompetitive.
LG's licensing agreement with Qualcomm expired on Dec. 31, but
the two parties had continued talks through this year on a new
pact, according to court documents filed by LG.
The agreement with LG also comes months after Qualcomm settled a
bruising patent-litigation fight with Apple Inc. that lasted more
than two years and was costly in terms of legal fees and lost
business. In that case, Qualcomm claimed Apple violated its patents
by withholding royalty payments, while Apple argued Qualcomm had
been overcharging for those patents for years.
Qualcomm shares rose 1.5% in midday trading Tuesday.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
August 20, 2019 13:52 ET (17:52 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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