Join GamesBeat Summit 2021 this April 28-29. Register for a free or VIP pass today.
After extended negotiations and a lawsuit that threatened to “impact the entire 5G market,” Qualcomm and LG today reached an agreement that will continue the South Korean company’s access to the U.S. chipmaker’s 3G, 4G, and 5G cellular modem technologies, apparently preventing a disruption of its smartphone business. But the long-term impact for Qualcomm and other 5G device makers is unclear.
LG terminated its master licensing deal with Qualcomm in 2018 in hopes that it could reach better terms with its key smartphone chip supplier. Yet their negotiations dragged on past the June end of an interim supply agreement, continuing as LG globally released its Qualcomm Snapdragon-powered V50 ThinQ 5G smartphone, and throughout its work on a superior sequel, the V60, which is expected to launch next month.
The deal notably comes after Qualcomm reached a similar modem supply and patent licensing deal with Apple, one of LG’s key customers, which had instigated lawsuits and antitrust investigations regarding Qualcomm’s chip supply terms. Shortly after Qualcomm and Apple settled their dispute, a U.S. federal court ruled that Qualcomm had been illegally suppressing smartphone chip competition, and ordered the company to renegotiate licensing agreements with customers at reasonable prices without threatening to cut off their supplies. But Qualcomm asked for the court’s order to be postponed pending an appeal.
Qualcomm is saying little about the agreement beyond the fact that it is granting LG a patent license to make “3G, 4G and 5G single-mode and multimode complete devices,” under an arrangement that’s “consistent with Qualcomm’s established global licensing terms” and “reaffirms the value of Qualcomm’s world-class patent portfolio.” That language suggests that there hasn’t yet been a dramatic change in the companies’ licensing agreements, but doesn’t rule out the possibility that the terms might subsequently be modified.
As the companies’ negotiations proceeded, analysts suggested that a failure to reach a deal with Qualcomm could have “catastrophic” consequences for LG’s smartphone business, while LG pointed to potential impacts on the entire 5G market. In essence, LG suggested, reducing chip or licensing payments to more “reasonable” levels would benefit everyone making 5G devices — except, of course, Qualcomm.
Without Qualcomm chips, LG would almost certainly be unable to continue producing global 5G devices for the immediate future, an issue that almost all of its competitors are facing as well. Rivals including Samsung and Huawei have already developed and shipped regionally usable 5G modems, while smaller chipmaker MediaTek is promising an alternative of its own in the coming months. Intel, a onetime competitor in the 5G modem business, sold off its smartphone modem division to Apple after failing to quickly bring Qualcomm-rivaling alternatives to market.
VentureBeatVentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact. Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:
- up-to-date information on the subjects of interest to you
- our newsletters
- gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
- networking features, and more