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By Sarah E. Needleman
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 21, 2019).
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.
Corrections & Amplifications The new licensing agreement between Qualcomm and LG Electronics is for patents covering 3G, 4G and 5G service in LG devices. An earlier version of this article incorrectly said the agreement was related to Qualcomm supplying chips in LG devices. (Aug. 20, 2019)
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(END) Dow Jones Newswires
August 21, 2019 02:47 ET (06:47 GMT)
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