Qualcomm Signs MOUs for Sales of $2 Billion with Lenovo, Vivo, Xiaomi, and Oppo
American telecommunications giant, Qualcomm has recently signed a number of memorandums of understanding (MOU) with the Lenovo group, Vivo Communication Technology, Xiaomi Communications and Guangdong Oppo Mobile Telecommunications. These MOUs have been signed in regards to sales worth around $2 billion, that’s worth about 127 billion in Indian currency!
These technology companies, Chinese-based, have expressed their interest in buying components within America’s Qualcomm over a period of the next three years. This is according to a statement made by the US chip manufacturer on Thursday.
Additionally, mentioned in the statement, the agreement will be non-binding and subject to additional agreements. This means that either party is able to break off the agreement at any time during negotiations for any reason whatsoever.
Reports have mentioned that the agreement relates to technology that will be used for RF Front-End components. It does not, however, make mention of any mobile processors manufactured by Qualcomm. Amongst all of the technical details mentioned in the statement, it is clear that the deal will enable smartphone companies to deliver handsets that are more power-efficient using the RF front-end solutions. This will allow these companies to offer their consumer’s more advanced products, not only in China but across the world. Qualcomm’s involvement in this way will help smartphone makers to reduce design effort as well as integration time to improve features such as battery life, advanced connectivity, and high-level performance.
This multi-year agreement was unveiled in Beijing at a Qualcomm event which was attended by Qualcomm’s very own chairman as well as chief executive.
This news comes within a few days of reports that surfaced in the Financial Times that the US Company could face of $1.2 billion from the European Union following a two-year investigation. The reason for this, according to a European watchdog, is that Qualcomm has had an anticompetitive deal with Apple on chip purchases. The watchdog plans to sue Qualcomm, claiming that they have been paying Apple to buy a vast majority of their communication chipsets for the period of 2011 to 2016.
Should this ruling escalate, it could fuel a number of other lawsuits that Apple has against Qualcomm across the world. Apple has claimed in the report that the chipmaker has used exclusionary tactics as well as excessive royalties resulting in billions of dollars spent by the iPhone maker in recent years.
Qualcomm has, in reply, stated that their business model is fair, given how innovative their chips are- it is a fair compensation. Apple has made exclusive use of Qualcomm chipsets until 2016 when they made a switch to Intel modems for their iPhone 7 range. Apple is reportedly moving towards creating an iPhone that relies on Intel and MediaTek entirely, which will put great strain on Qualcomm’s sales.
Having been a leader in the mobile phone industry since 1985 and helping to develop and expand the mobile and smartphone industry, Qualcomm has been facing a number of legal battles in recent years, from law violations to unfair patent laws and forced layoffs. The company has already felt the pinch with fines cutting into profits in the fourth quarter of 2017 by up to 89%.
To make matters worse, Qualcomm’s direct competitor, Broadcom is working hard in an attempt to acquire Qualcomm in a bid of $105 billion. All the while, Qualcomm itself is trying to secure a deal of $47 billion for NXP Semiconductors, making the takeover all the more difficult for Broadcom.
By signing these MOUs with large technology companies like Lenovo, Vivo, Xiaomi and OPPO could help the chip making giant remain in the marketplace and pick up some of the pieces, after facing a huge bout of legal battles as well as the impending cases with Apple and the EU.