Qualcomm Shares Surge After Striking Patent Deal with Huawei

July 30, 2020 0:05 pm

BEIJING (PingWest) — Qualcomm shares surged to a record high in after-market trading on Wednesday after the world leading chipmaker reported fiscal third-quarter earnings that beat expectations and a long-term licensing deal with China-based and the world's largest telecom equipment maker Huawei.

Qualcomm said it expected to record $1.8 billion in settlement payments from Huawei in the quarter ending in September to cover previously unpaid licensing fees.

The California-based company also entered into a multiyear agreement with Huawei, which will be a leading vendor of 5G smartphones and network equipment.

“With the signing of the Huawei agreement we are now entering a period in which we have multiyear license agreements with every major handset OEM,” Qualcomm CEO Steve Mollenkopf said on a call with analysts. 

The deal with Huawei follows a similar agreement with Apple last year.

One third of new smartphones sold last quarter in China were 5G-capable, a report from Counterpoint Research suggested last week.

“Traction in 5G continues to be high,” said Cristiano Amon, Qualcomm president. “We now have more than 80 commercial networks in 35 countries . . . so 5G momentum has not slowed down and it’s giving us confidence in [our earlier] estimates.”

Qualcomm shares skyrocketed by more than 13% in after-hours trading to $105.35, indicating that the stock will open at a record high on Thursday.