Qualcomm Is Surging Following Xiaomi Partnership

• Shares of QUALCOMM, Inc. QCOM surged higher by more than 7 percent Wednesday morning.
• Qualcomm announced an agreement to license its patents to Xiaomi.
• As part of the agreement, Qualcomm will allow Xiaomi to use its patents in new 3G and 4G devices.

Shares of Qualcomm spiked higher on Wednesday after the company announced a new agreement with Xiaomi, a major China-based smartphone manufacturer. As part of the agreement, Qualcomm has granted Xiaomi a royalty-bearing patent license to develop, manufacture and sell 3G and 4G devices.

Apple Inc. AAPL has seen tremendous success in the Chinese smartphone market, forcing local manufactures to win over customers on quality and/or price. Xiaomi's CEO Lei Jun said in a press release that the agreement with Qualcomm will "play an important role" in helping the company bring the "newest and most innovative" products to its growing customer base.

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Forbes reviewed back in February Xiaomi's flagship phone, the Mi 4. The publication noted the device "performs well" and is a "handset that will not leave you asking for more." In a head to head comparison with the iPhone 6, Xiaomi loses in the international market, but inside of China it is a "much closer contest."

"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," said Derek Aberle, President of Qualcomm in the same press release. "We work closely with our partners, such as Xiaomi, to push the boundaries of what's possible and drive the advancement of the mobile industry."