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Asia300

Qualcomm keeps Samsung close while fending off Broadcom bid

US chipmaker announces patent deal and strategic partnership with South Korean manufacturer

The Qualcomm campus in San Diego, California.   © Reuters

PALO ALTO, U.S. -- Qualcomm and South Korea's Samsung Electronics have struck a deal that ensures the American chipmaker a steady stream of patent royalty income and the end of an antitrust dispute with the world's largest smartphone producer.

Under the expanded cross-licensing agreement announced Wednesday, Qualcomm collects royalty payments on patents licensed for use in Samsung devices until 2023, based on the prices of the phones.

This will provide needed earnings support for a U.S. chip supplier that has seen Apple, another major customer, refuse to pay these royalties amid a legal dispute over pricing. The agreement could also help Qualcomm's management secure shareholder backing against a hostile takeover attempt by compatriot Broadcom.

Samsung also agreed to drop its objections to a Qualcomm appeal of a fine issued by the Korea Fair Trade Commission. For Qualcomm, whose patent-pricing policy has been the focus of antitrust investigations in numerous jurisdictions, this means one less risk to worry about.

Qualcomm and Samsung also announced a multiyear "strategic relationship" of cooperation in various technologies and mobile devices.

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