An unexpected but pleasant surprise was announced at Qualcomm’s recent earnings call. Huawei had settled its $1.8 billion dispute with Qualcomm regarding the licensing of essential technologies. It represents another important win for Qualcomm in its long and hard fought battle with OEMs including Apple to preserve the integrity and vitality of its technology business. It can be considered a win for innovation. But what does the settlement mean in the grand scheme of things and the rising tensions between the US government and Huawei?
- What is the background of the licensing dispute? – What is Qualcomm’s licensing business (QTL)? We delve into Qualcomm’s IP and technology innovation business and provide an overview of the history of the recently resolved royalty dispute with Huawei.
- Settlement in the midst of escalating US-China tension? – We talk about the souring geopolitical backdrop that sets the scene for the settlement. We also discuss the importance of IPR (intellectual property rights) as it relates to trade tensions as the less-than-obvious levers that Huawei has on Qualcomm’s business.
- What were Huawei’s motivations to settle? A hypothesis. – Given the regular cadence of tit-for-tat trade jabs between the United States and China, Huawei settling with Qualcomm is a curious move. Does it mean that Huawei is caving into Qualcomm pressure or something else?
- What did Qualcomm gain? What did Huawei gain? – The CCP’s mantra is “win-win”. What did Qualcomm and Huawei get out of making peace?
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Managing Director, neXt Curve
Founder and Principal Analyst, Tantra Analyst
August 7, 2020
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