China’s Xiaomi lands 3G, 4G licensing deal with Qualcomm amid push to sell more internet-connected smart devices globally

PUBLISHED : Friday, 04 December, 2015, 4:27pm
UPDATED : Friday, 04 December, 2015, 4:31pm

Xiaomi, China’s high-flying consumer technology start-up, is looking to accelerate its global business expansion plans after landing a new 3G and 4G license deal with US mobile chip giant Qualcomm.

“A license from Qualcomm will play an important role in helping us bring the newest and most innovative products to our growing customer base,” Xiaomi co-founder and chief executive Lei Jun said on Thursday.

In a joint statement, Qualcomm said it has granted Xiaomi a “royalty-bearing patent license” to develop, manufacture and sell 3G and 4G devices.

It is a deal designed to push forward plans Xiaomi’s plans to develop and sell more internet-connected smart devices for consumers.

The company, which was initially derided as an Apple clone, has come into its own as a supplier of trendy low-cost smartphones in many markets around the world. Ironically, it now has clones of its own.

Data from research firm IDC showed that Xiaomi shipped 18.3 million smartphones in the third quarter, up from 17.3 million in the same period last year, to rank as the world’s fifth-largest supplier of smartphones.

Xiaomi also sells tablets, television sets, fitness bands, air purifier, headphones and rechargeable power banks - all of which are primarily sold online.

To foster a broader portfolio of smart products, it is also marshalling an army of start-ups to further this goal.

Lin Bin, Xiaomi’s co-founder and president, recently said the company was also keen to focus more on online shopping, digital movies and games.

“We’d rather be called an internet company,” Lin said at a US technology conference in October.

Xiaomi currently sells its products in Taiwan, Hong Kong, Singapore, Malaysia, the Philippines, India, Indonesia and Brazil.

“Qualcomm is committed to the success of its partners in China as they continue to grow their businesses,” company president Derek Aberle said.

The US firm, which is the world’s largest supplier of mobile chips, said the royalties payable by Xiaomi are consistent with the terms of the “rectification plan” it submitted to China’s National Reform and Development Commission (NDRC).

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.

In February, Qualcomm agreed to pay a 6.09 billion yuan (US$951.73 million) fine to conclude that probe.

The NDRC, a macro-economic agency under the State Council, had earlier found Qualcomm in violation of China’s Anti-Monopoly Law.

Aberle said in January that the government investigation was disruptive to its business on the mainland.

Following that resolution with the NDRC, Qualcomm vowed to continue to expand its investments and collaborations, including with China’s mobile network operators, smartphone makers and other device suppliers, and within the country’s semiconductor industry.

In July last year, Qualcomm created a China-specific investment fund of US$150 million to further the development of mobile and semiconductor technologies, including initial investments in five mainland companies.

The company has also expanded its longstanding business relationship with Semiconductor Manufacturing International Corporation, China’s largest and most advanced contract manufacturer of integrated circuits.