In its fourth fiscal quarter, that agreement will pay Qualcomm $1.8 billion plus whatever royalties come from the settlement, Qualcomm said. Qualcomm had projected $4.4 billion to $5.2 billion, while analysts expected about $4.81 billion.
The smartphone industry, which has suffered declining unit shipments since 2016, is pinning its hopes for a rebound on 5G, which will bring faster data speeds for consumers and add connections and services to now stand-alone electronics.More news: Rudy Gobert Fittingly Scores First Official Bucket in NBA Bubble
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.
Huawei, which is still subject to United States government restrictions, trumped Samsung for the first time in the worldwide smartphone market in the second quarter, research Canalys said on Thursday. Qualcomm specified the outbreak had prompted a delay in the launch of a "global 5G flagship". Shares of Qualcomm jumped 13 percent in after hours last night, and at the time of this writing, the company's stock price is up more than 11 percent, to $103.58.
Third-quarter net income fell to $845 million, or 74 cents a share, from $2.15 billion, or $1.75 a share, a year earlier. Excluding certain items, profit was 86 cents, compared with Wall Street's average estimate of 70 cents. Apple makes its own core processor but uses Qualcomm's modem chip.More news: Work begins in France to recreate process that powers Sun
The chipmaker has repaired a once-broken relationship with Apple Inc. and will be returning to a role in the iPhone models debuting later this year. The company's market cap is now around $115.77 billion.
Qualcomm has been expecting to ride a 5G smartphone growth wave for a while now, and it finally looks to be taking hold as the San Diego wireless technology giant on Wednesday issued a strong forecast for the current quarter ending in September.
Qualcomm is unique in the chip industry because it gets the bulk of its profit from licensing patents that cover the fundamentals of modern phone systems.More news: James Murdoch resigns from News Corp, citing "disagreements" over editorial content
The reach of its intellectual property and the profits they generate has attracted legal and regulatory challenges around the world.