Qualcomm has finally inked a licensing deal with Lenovo, the US chipmaker announced on Thursday, ending a 12-month period marred by delayed royalty payments from China’s biggest smartphone vendors following a damaging rift with the country’s government.
The deal covers Lenovo chips as well as Motorola, which was acquired by the Chinese hardware giant in late 2014. The fresh patent agreement grants Lenovo a royalty-bearing license to develop, manufacture and sell 3G and 4G devices built with Qualcomm technology.
Lenovo is the last of China’s five big smartphone makers to reach a deal with Qualcomm, whose stock price tumbled over 38 percent in 2015 amid troubles settling patent agreements with the cornerstone clients. Qualcomm’s stock price jumped almost two percent in after hours trading following the latest announcement.
Qualcomm’s patent fees account for some 60 percent of their total revenue, while Chinese business accounts for roughly half of the company’s total revenue.
Qualcomm came under fire from the Chinese government in November 2013, when they reportedly breached the country’s antitrust laws. Qualcomm was forced to pay a $975 million USD fine in February 2015, along with new conditions requiring Qualcomm to adjust royalty rates in future Chinese deals. Vendors capitalized on the legal spat to hold out on paying licensing fees. Notably Xiaomi waited until December 2015 to seal a patent deal with the US chipmaker.
Lenovo’s delay has also been linked to poor sales performance within their mobile division. The company has struggled to turn a profit on their handsets since the costly acquisition of Motorola coincided with a global slowdown in mobile sales.