Qualcomm announced that it earned a net income of $845 million on revenues of $4.9 billion for the quarter ending June 30, roughly flat with the previous year. But it also announced an important settlement agreement with Huawei, sending its shares soaring.
“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” Qualcomm CEO Steve Mollenkopf said in a prepared statement. “We delivered earnings above the high end of our range, continued to execute in our product and licensing businesses and entered into a new long-term patent license agreement with Huawei, all of which position us well for the balance of 2020 and beyond.”
Qualcomm is the biggest maker of microprocessors and other chipsets for smartphones and mobile devices, but with unit sales declining for three years, it has pinned its hopes on 5G, which is both lucrative for Qualcomm from a licensing perspective but also seeing a delayed rollout because of the pandemic. Indeed, Qualcomm’s announcement has a veiled reference to what is clearly Apple.
“Our guidance for the [current] quarter … includes an impact … attributable to a planning assumption of an approximate 15 percent year-over-year reduction in handset shipments due to COVID-19, including a partial impact from the delay of a global 5G flagship phone launch,” it reads.
In the good news department, Qualcomm settled a long-running patent licensing spat with Huawei, the world’s second-largest maker of smartphones. Qualcomm has now settled with all of the firms that previously complained about its licensing costs.