Qualcomm Incorporated stock has leapt over 5 percent, the biggest single-day increase in four years, following news that they have settled new 3G and 4G license patent agreements with Xiaomi.
It’s a relief for the California-based chipmaker, which has seen its stock decline heavily in 2015 over licensing issues and slowing market demand.
“We are pleased to reach this new agreement with Xiaomi,” said Derek Aberle, President of Qualcomm in a release on Wednesday. “Qualcomm is committed to the success of its partners in China as they continue to grow their businesses.”
Qualcomm’s inability to collect licensing fees from Chinese smartphone vendors in particular has cut into the company’s bottom line. Licensing fees for mobile technology make up approximately 60 percent of the company’s total revenue.
To date, Qualcomm’s total decline in 2015 now sits at approximately 30 percent. A tough smartphone market has also contributed to the company’s slide, as top suppliers Apple and Samsung increasingly rely on in-house components.
Qualcomm accepted a $975 million USD fine in February from China’s National Development and Reform commission following an inquiry into antitrust violations. The process caused the company’s licensing negotiations in China to stall, though they have since been strongly pursuing vendors.
They are still yet to close licensing discussions with Lenovo. The Chinese smartphone maker is struggling to bring their smartphone business back to profitability after acquiring Motorola. Lenovo could potentially roll the payments over to 2016.
Neither Xiaomi nor Qualcomm have revealed specific details of the latest licensing agreement.