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Qualcomm and Huawei have been embroiled in a patent royalty dispute for some time now but the two companies are reportedly in talks to settle and could reach an agreement in the next few weeks. Citing sources familiar with the matter, the Wall Street Journal reports that the negotiations between Qualcomm and Huawei are in advanced stages. No decision is yet set in stone and the talks may still fall apart, insiders claim. Qualcomm is currently trying to resist a hostile takeover attempt from Broadcom and the tense situation might also affect its negotiations with Huawei.
The chipmaker was previously said to have been involved in legal disputes with two major customers that license its patents: Apple, which told its contract manufacturers to stop paying Qualcomm, and another licensee that was not named. It now looks like the other major licensee was Huawei, and it stopped paying royalties to Qualcomm back in April. Should Qualcomm manage to reach an agreement with Huawei, the development could help it resist Broadcom’s $117 billion takeover bid, some industry watchers believe.
Qualcomm had an annual board meeting set for Tuesday when its shareholders were supposed to vote whether six out of eleven directors should be replaced with Broadcom’s nominees. A U.S. government committee in charge of investigating national security concerns associated with foreign acquisitions has postponed that meeting until April 5. If Qualcomm reaches agreements with device makers and patent licensees by then, it could obtain the royalties it’s due and earn some additional goodwill from investors. In turn, this could bolster its position at the shareholder meeting next month and allow it to fend off Broadcom’s hostile takeover bid. Settling disputes with device makers could translate to billions of dollars in revenue, which should significantly strengthen Qualcomm’s overall position. The chipmaker already announced back in January that it reached a set of licensing and research agreements with Samsung, and Huawei could be the next one to settle. With Apple, meanwhile, Qualcomm is involved in several lawsuits in the United States and other markets, and no end to that legal clash is still in sight.