Shares jumped more than 13 per cent in after-hours trading © Reuters

Qualcomm shares rose nearly 12 per cent to a record high in after-market trading on Wednesday after the chip company issued a strong forecast for the current quarter and said it would receive $1.8bn from Huawei after resolving a long-running dispute over patent licences.

The California-based company said it was “realising the benefit of the investments we have made” in 5G mobile technology, projecting that adjusted revenues could be as high as $6.3bn in the current quarter, compared to a $5.8bn estimate from analysts polled by Refinitiv.

Qualcomm said it had agreed a deal under which Huawei will pay it a catch-up fee to use its patents to design and manufacture products.

"We expect to record approximately $1.8 billion of revenue in our fourth fiscal quarter for amounts due under the settlement agreement relating to the prior license period and the new license agreement for the first half of calendar 2020," it said.

This agreement ends a multiyear period of legal uncertainty for Qualcomm, as Huawei had been withholding revenues and complaining about the US company’s licensing practices. While Huawei is on a Commerce department blacklist that means it cannot buy chips from Qualcomm, it has resumed paying licensing fees.

“With the signing of the Huawei agreement we are now entering a period in which we have multiyear licence agreements with every major handset [maker],” Steve Mollenkopf, Qualcomm’s chief executive, told analysts.

The deal with Huawei, which was only second to Samsung by smartphone sales in 2019, follows a similar agreement with Apple last year.

A report from Counterpoint Research last week suggested that a third of new smartphones sold last quarter in China, the world’s biggest handset market, were 5G-capable.

“Traction in 5G continues to be high,” said Cristiano Amon, Qualcomm president. “We now have more than 80 commercial networks in 35 countries . . . so 5G momentum has not slowed down and it’s giving us confidence in [our earlier] estimates.”

Geoff Blaber, analyst at CCS Insight, said: “Qualcomm’s earnings show its multiyear 5G investments are blossoming having overcome several roadblocks and despite a difficult economic environment.”

In the quarter ended in June, the chipmaker reported $4.9bn in revenue and earnings per share of $0.86, beating estimates of $4.8bn and $0.71, respectively.

Qualcomm said the figures would have been even better were it not for a “partial impact from the delay of a global 5G flagship phone launch”.

The reference was widely assumed to be the delay to Apple’s upcoming iPhone 12, which would confirm reports that the model is one to two months behind schedule.

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