China hasn’t always been an easy market for Qualcomm, but a bump in Chinese chip demand has given the U.S. chipmaker something to smile about.
Shares in the company jumped 7 percent in after hours trading following the release of their Q3 earnings on Wednesday, which showed unexpected gains, boosted by Chinese chip demand.
The company posted a 3.6 percent Non-GAAP revenue hike to $6.04 billion USD. Analysts had predicted a year-on-year decline from $5.8 billion to $5.58 billion.
Qualcomm CEO Steve Mollenkopf credited the rise to progress in the company’s licensing business, which makes up over 50 percent of their total revenue. During the earnings call he also noted that demand for lower-tier chip sets in China has risen unexpectedly.
The results are a relief for Qualcomm, which has suffered globally due to slowing smartphone sales. It’s also the first revenue rise in five quarters for the company.
Qualcomm has run into issues inking licensing deals in China in the past. In 2015 the company forked out $975 million USD in fines following a year long anti-trust investigation by the Chinese government. They then struggled to seal high-level licensing deals with Chinese smartphone vendors throughout the year, cutting into their bottom line.
Qualcomm asserted their licensing claims in China last month when they revealed they are suing Alibaba-backed smartphone company Meizu over patent infringements.
Mr Mollenkopf noted during the latest earning’s call that they were more optimistic about further deals, and are currently in negotiations with the remaining OEMs.
The company also reiterated their commitment to 5G technology, expecting to make significant moves in the sector between 2018-2019. Regulatory conditions have recently begun to ease in the lead up to global 5G rollouts, as countries work on opening spectrum allocations.
So that’s how the Chinese government steals money.
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