Key Highlights

● Qualcomm signed a multiyear Patent cross-license with Huawei covering 5G, AI, computing and networking.

● The deal includes Huawei's LogicFolding chip technology, but financial terms were not disclosed.

● The agreement still requires review by the US Federal Trade Commission.

Qualcomm was in focus on Monday, Oct. 5, after signing a multiyear patent cross-license with Huawei covering 5G, AI, computing and networking, a deal that still needs a regulatory review.

The Huawei deal

Qualcomm (NASDAQ:QCOM) was one of the most talked-about stocks on the Nasdaq-100 on Monday after it signed a multiyear patent cross-license agreement with China's Huawei.

The deal covers a wide spread of technology: 5G, computing, AI, near-packaged and co-packaged optics, and networking. It also includes Huawei's LogicFolding chip technology. Financial terms were not disclosed, and the agreement requires review by the US Federal Trade Commission.

A cross-license lets each company use the other's patented technology. For a company like Qualcomm, which earns a large part of its income from licensing its wireless patents, agreements with major phone and equipment makers are a core part of the business.

Qualcomm shares rose before the open on Monday, and other reports showed gains in overnight trading after the patent deal was announced. No reliable closing figure was found for the stock, so the size of its move by the end of the regular session is not clear.

Qualcomm had been flagged as one of the stocks in focus heading into Monday, alongside SpaceX (NASDAQ:SPCX) and Vistra (NYSE:VST).

Why it matters

Huawei is one of the world's biggest telecom equipment and smartphone makers. A broad licensing arrangement between the two companies covers technologies that sit at the heart of modern devices and data networks, including the AI and optics fields that are drawing heavy investment.

The required FTC review means the deal is not yet final. Regulators will look at the agreement before it takes full effect, and the outcome of that review is not known.

The semiconductor sector had a split session. Nvidia (NASDAQ:NVDA) rose to a record close, and TSMC's (NYSE:TSM) US-listed shares climbed after Elon Musk confirmed early talks with the company about his Terafab chip venture. Intel (NASDAQ:INTC) fell on fears it could lose its exclusive role at Terafab. GlobalFoundries (NASDAQ:GFS) slid after a downgrade, and AMD (NASDAQ:AMD) slipped.

Hard-drive makers Western Digital (NASDAQ:WDC) and Seagate (NASDAQ:STX) rebounded after a sharp selloff on Friday.

Records for the Nasdaq

The broader market was strong. The Nasdaq-100 closed at a record 31,076.44, and the Nasdaq Composite jumped 286.45 points to a record 27,477.31. The S&P 500 added 51.23 points to 7,773.95, just shy of its summer record. The Dow rose 90.94 points to 51,267.90.

That came despite the 10-year Treasury Yield climbing to its highest level since 2002 after the ISM services prices-paid index hit 74.0, the highest since July 2022. Friday's weak September jobs report, with payrolls up just 29,000, cut bets on an October Fed hike to roughly one in four or less.

Trade backdrop

Trade policy remained a live issue for chip and tech companies. Over the weekend, President Trump said foreign companies have about 18 months to build plants in the US or face tariffs. ISM survey respondents also cited tariffs among the price pressures they face.

For investors, the cross-license adds another long-term agreement to Qualcomm's licensing portfolio, though its financial impact remains unknown until terms are disclosed.

What to watch

The FTC review of the Huawei cross-license is the key next step for Qualcomm's deal. Investors will also look to the company's next Quarterly Report for any detail on how the agreement affects licensing revenue.

On the macro calendar, minutes from the Fed's September meeting are due Wednesday, Oct. 7 at 2 p.m. ET, and the Fed meets again Oct. 27 to 28.