Qualcomm Rejects Broadcom's $6-per-chip Licensing Offer

Last week, as we reported, Qualcomm's request for a stay of injunction against the sale of certain of its chips in the US was denied, and that denial was upheld by the International Trade Commission. This after the company was found to have infringed upon three Broadcom patents. At that time, Broadcom said it was open to seeking a negotiated settlement with Broadcom.

As Bloomberg News first reported yesterday, Broadcom invited Qualcomm to the table but set a fairly hefty entry fee: $6 for every unit of Qualcomm's infringing chips already exported to the US, as a catch-up licensing fee. Qualcomm has apparently rejected that offer, publicly stating that it was hoping for something closer to $100 million to call it even, and then cross-license each other's patents for no charge.

Bloomberg cites a Qualcomm official as having said the proposed terms would exceed 30% of its revenues from sales of the offending chipsets, or as much as $2 billion over a three-year period.

If that official's calculations are accurate, that could be about a fourth of what Qualcomm earns in royalties for its entire portfolio during a normal three-year span. Royalties reportedly constitute about two-thirds of the company's total revenue.

Qualcomm Vice President for Investor Relations Bill Davidson told the San Diego Union-Tribune, "We clearly can't agree to something that destroys our business." Earlier Broadcom statements implied it believes Qualcomm enters into that kind of royalty agreement with other companies all the time.

But analysts told the Union-Tribune that Qualcomm may be desperate to settle this dispute, as indicated by the notion that it would consider offering its royalty portfolio to another company for no cash whatsoever - something it may never have done before.

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