Qualcomm extending lower licensing rates to appease regulators and OEMs
With lawsuits going after Qualcomm for its alleged anti-competitive behavior in licensing out its modems coming from government commerce agencies and clients, the company is now giving out concessions as a bid to relieve tensions with the parties.
In an interview with Reuters, the chipmaker’s licensing division chief Alex Rogers announced that it would extend lower rates for its patents to big customers. The company hopes that a good faith move would bring smartphone maker Apple back to the negotiating table as well as another company, which industry sources have mentioned as Huawei.
Major clients now have two patent bundles to choose from: a complete package for 5 percent of unit revenues or a standard-essential patents package — covering basic 3G and 4G connection technologies — for 3.25 percent. The latter package was created after the company settled with China’s National Development and Reform Commission over antitrust charges on its modem technologies in 2015.
Last week, Qualcomm announced that it would lower the license rate cap, having it apply up to $400 of a device’s price instead of $500. Should manufacturers choose to renegotiate licenses, they may effectively pay only half of what they used to per unit — $13 versus $25. But keep in mind that Qualcomm works with audio codecs, 5G, Internet of Things and artificial intelligence technologies among others. These features are to appear in flagship phones soon if they have not already.
“What we’re doing here is creating a foundation for stability going forward,” Rogers said. “We have not lowered the rate. What we’re doing is including more technology, more [intellectual property] in the offering without increasing the price.”
For the time being, lawsuits from Apple and FTC will roll on. Qualcomm is under pressure to increase returns to shareholders after being pulled away from an acquisition by Broadcom. We’ll have to see if this move will defuse some tensions.