Dec 03, 2015 06:00 AM EST

Qualcomm, Xiaomi Reach License Deal Agreement

Qualcomm and Xiaomi finally reached an agreement over license deals.

According to the Wall Street Journal, Qualcomm Inc. announced that it reached a patent-licensing deal with Xiaomi Corp., one of the largest smartphone makers in China, signaling the progress in easing the American chip maker's struggles in the country.

With the news, the company's stock jumped 5.6 percent to $52.03 in afternoon trading on Wednesday.

Qualcomm is noted to get more than half of its profits from licensing patents, and customers in Asia, particularly China, accounted for more than half of total revenue during the fiscal year that ended in September.

On Nov. 4, the company cited delays in convincing Chinese handset makers to sign licensing agreements in projecting lower profit than expected in its first fiscal quarter, resulting into Qualcomm's shares to fall by 15 percent in the next trading session.

In a similar report by Recode, the agreement with Xiaomi means that Qualcomm will have additional revenue for its licensing business and this shows that the company is making a slow, but steady progress in its effort to get Chinese phone makers to pay patent royalties in the wake of an antitrust settlement in that country.

On the other hand, Xiaomi has been eyeing an expansion beyond emerging markets. Doing so likely means to patent licensing deals with some of the key players in the industry. It still remains in a dispute with Ericsson and could face actions from Apple or others if the company decided to move into markets with stronger intellectual property laws.

According to the report, XIaomi said that it wants to bring its devices eventually to the U.S. market, though it has yet to give a concrete time frame regarding when.

Company President Derek Aberle said in a statement, "Qualcomm is committed to the success of its partners in China as they continue to grow their businesses and we are pleased to reach this new agreement with Xiaomi."

Meanwhile, in a report by Forbes, Xiaomi CEO Lei Jun said, "Xiaomi prides itself on embracing and leading smartphone innovation through its popular line of Mi devices," adding that, "A license from Qualcomm will play an important role in helping us bring the newest and most innovative products to our growing customer base."

Qualcomm's stock has been taking a beating this year due to a huge loss as Samsung decided to use homegrown chips to power its current flagship models.

However, there is still a number of issues that the company has to sort out, but for now, Xiaomi is here to recharge its funding.

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