Qualcomm has had a virtual monopoly in many mobile chip markets for years, thanks to its patents on key communication technology, which it has been enforcing rigorously around the world. NXP works in more competitive but fast-growing areas.
Qualcomm recently offered what looks like an olive branch, a lower-cost model for licensing its patents for 5G. This deal could also flow into the NXP talks because, in addition to Apple, it is also fighting China’s Huawei on royalty rates.
Right now, handset-makers are feeling forced to license Qualcomm’s full set of patents, for 5% of their costs, but Qualcomm will now allow them to buy only those patents essential to industry standards at a 3.25% rate, with 5G thrown in free. It’s a deal it began offering Chinese companies in 2015, before 5G was on the horizon.
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