China’s Lenovo, in ‘full attack mode’, teams up with Qualcomm on 3G and 4G patent licenses

Move seen as crucial to revitalise Lenovo’s ailing smartphone sales

PUBLISHED : Friday, 19 February, 2016, 7:49pm
UPDATED : Friday, 19 February, 2016, 7:55pm

Chinese technology giant Lenovo Group’s plan to energise its flagging smartphone business took a big step forward as the company entered into a new 3G and 4G patent license deal with US mobile chip giant Qualcomm.

That agreement followed the commitment made by Lenovo chairman and chief executive Yang Yuanqing earlier this month to go on “full attack mode” in the Year of the Monkey to turn around its smartphone operation.

Qualcomm granted Lenovo, the world’s largest supplier of personal computers, a “royalty-bearing” patent license to develop, manufacture and sell 3G and 4G devices.

READ MORE: No January blues for China’s smartphone market as 2015 saw record sales of 460.5 million units as 4G handsets take off

Scott Offer, general counsel at Lenovo, said in a statement that the Qualcomm deal improved the Chinese company’s intellectual property (IP) position in its home market, where competition is intense against other domestic smartphone suppliers.

“This agreement also provides a solid foundation for Qualcomm and Lenovo to expand and strengthen the long-term relationship between our companies, both in China and around the world,” Offer said.

Xiaomi, China’s high-flying consumer technology start-up, had earlier landed its own 3G and 4G license deal with Qualcomm in December.

“Seems like Lenovo is locking things up and playing by the rules to continue its global expansion,” Bernstein senior analyst Alberto Moel said.

“Additional access to IP should be helpful in keeping product development in smartphones and smartwatches at the leading edge.”

Strategy Analytics said last year’s top mobile phone brands on the mainland, the world’s biggest smartphone market, were Xiaomi, Huawei Technologies, Technologies, Apple, Vivo and Oppo.

Neil Mawston, the executive director at Strategy Analytics, said Lenovo “may find it harder to return to the top-five ranking in mainland China because it is still battling with the Motorola integration”.

Lenovo, which Strategy Analytics ranked as the world’s fourth-biggest smartphone supplier last year, wrote off US$300 million of its smartphone inventory in the quarter to September as part of a corporate restructuring.

Large currency fluctuations and intensifying competition especially hurt Motorola Mobility’s smartphone business, which Lenovo bought last year from Google for US$2.91 billion.

Qualcomm said the royalties payable by Lenovo are consistent with the terms of the “rectification plan” it submitted to China’s National Reform and Development Commission.

That plan was part of the resolution made by Qualcomm in February to end a 14-month long government probe in China for anti-competitive practices.