Qualcomm has plunged into the red after settling its long-standing patent dispute with Broadcom.
Under the settlement, Qualcomm will pay the rival chip firm $891 million over four years. Both parties have also granted each other rights under their patent portfolios.
Settlement and litigation charges impacted Qualcomm's bottom line by $748 million, swinging the company to a $10 million operating loss and a $289 million net loss. Qualcomm will also pay Broadcom $200 million in royalties this quarter.
“The recent settlement with Broadcom will resolve all pending litigation between the parties, and while this settlement adversely impacted our quarter[ly] results, eliminating uncertainty, employee distraction and cost related to protracted litigation is a positive,” Qualcomm CEO Paul Jacobs said.
The parties had been fighting patent battles for years, and had lodged lawsuits or disputes – each of which has now been withdrawn - with the International Trade Commission, the US District Court, the European Commission and the Korea Fair Trade Commission
One such dispute was over Qualcomm's 1xEV-DO and W-CDMA chipsets, which Broadcom alleged infringed on its power management patents.
Qualcomm's revenue fell slightly to $2.46 billion. The company expects to post an operating profit of around $1.06 billion and ship around 107 million CDMA and W-CDMA devices this quarter.