Samsung renews wireless license with Qualcomm

Samsung Electronics Co., the world's No. 2 mobile handset maker, said Thursday it has sealed a new 15-year contract with Qualcomm Inc. on the cross-licensing of wireless telecom technology.

Samsung will make a down payment of US$1.3 billion to Qualcomm for using the U.S. firm's patents for third- and fourth-generation wireless technology, the Korean firm said in a statement. The deal also involves payment of running royalties, but Samsung failed to give specifics.

Qualcomm, the world's leading producer of mobile phone chips, owns key patents for code division multiple access (CDMA), one of the most widely used wireless network standards in the world.

The contract calls for Samsung to allow Qualcomm to use Samsung's 57 patents for mobile technology, but Samsung will not be paid by Qualcomm due to the higher value of Qualcomm's licenses.

Samsung said the deal is more favorable than the previous one, but it declined to say why. "The new deal is better for us," a Samsung spokesman said, without elaborating.

The San Diego-based chipmaker welcomed the extension of the cross-licensing deal with one of its biggest customers.

"I am also pleased to announce that we recently extended our license agreement with Samsung, covering both 3G and 4G," said Paul E. Jacobs, chairman and CEO of Qualcomm, in a statement posted on its Web site.

South Korea is a major market for Qualcomm as the country is home to Samsung and LG Electronics Inc., the world's third-largest cellphone maker, with nine out of every 10 South Koreans owning at least one handset.

In July, South Korea's antitrust watchdog fined Qualcomm $208 million for violating the nation's fair competition rules by abusing its monopoly over the mobile handset chip market.

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