Qualcomm made it evident that it is aiming to ease licensing terms in order to strike deals at its earnings call on Wednesday. The chipset maker posted quarterly profit and revenue that topped Wall Street forecasts, which suggests that the company’s slowdown in the global smartphone business might be less severe.
Qualcomm’s other line of business includes licensing patents that are essential for smartphones to work and this has traditionally driven most of its profits. However, this business has dropped sharply over the past year, as revenue most of which is attributed to Apple’s iPhones withheld amid a legal dispute.
Qualcomm now made it evident that it is prepared to accept lower revenue in exchange for maintaining the business structure and avoiding future customer disputes. Qualcomm calculated the percentage of the selling price of a smartphone and this so-called model had been the center of regulatory disputes in China, Korea an, the United States and also in its disputes with Apple.
However, during the earnings call, Qualcomm said it would cap the phone price which is the basis of the revenue calculation at $400. More expensive phones, which can sell for $1,000, would still be treated as $400 for the Qualcomm license fee. This move comes after Qualcomm announced its decision in November to license some patents that are required for connecting the 5G networks at a rate of 3.25 percent.
When asked about whether the company would receive less revenue from 5G patents, Alex Rogers, Qualcomm’s licensing chief said: “We’re not getting paid less for it. I think the best way to think about this is building a foundation for long-term stability.” The company also cut a deal with Samsung Electronics Co Ltd that appears to be at the lower rate.