Smartphone chipmaker Qualcomm Inc.’s shares rose by double digits in after-hours trading today after it reported better-than-expected third-quarter results and said it has resolved a long-running dispute with Huawei Technologies Co. Ltd.

It also agreed to a new long-term licensing agreement with the Chinese firm that should bring in about $1.8 billion in revenue in the fourth quarter.

That helped soften the blow to Qualcomm’s business from the coronavirus pandemic, as the chipmaker said it expects a 15% year-over-year reduction in handset shipments during the next quarter.

Qualcomm reported a profit before certain costs such as stock compensation of 86 cents per share on revenue of $4.89 billion. Wall Street was expecting the company to report earnings of just 71 cents per share on revenue of $4.81 billion.

The company also issued a strong forecast for its current quarter, suggesting that 5G is starting to become an economic force. Qualcomm sells modem chips to phone makers and licenses critical patents to anyone using 5G technology.

“Qualcomm had an excellent third quarter, reporting earnings above the high-end guidance and revenue at the midpoint of guidance,” said Moor Insights & Strategy analyst Patrick Moorhead. “This is a testimony to the resiliency and growth of 5G even during the COVID-19 pandemic.”

Qualcomm’s licensing division, Qualcomm Technology Licensing, reported revenue of $1.04 billion for the quarter, down 19% from a year ago.

Meanwhile, its other business, Qualcomm CDA Technologies, pulled in revenue of $3.8 billion for the quarter, up 7% from a year ago. Within that segment, mobile station modem shipments came to 130 million, down 17% from a year ago.

“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” Qualcomm Chief Executive Steve Mollenkopf (pictured) said in a statement.

Moorhead noted that the company signed 15 new 5G licenses for a total of 100, and added more than 285 Snapdragon 5G design wins for a total of 660. “That’s a leading indicator of future business,” he said.

What really pleased investors, though, was the settlement and new licensing deal with Huawei. The settlement includes money owed to Qualcomm from several previous quarters, and will add around $1.38 in earnings per share and $1.8 billion in revenue in the next quarter, the company said.

After adjusting for that onetime windfall, Qualcomm said, its fourth-quarter profit will come in at about $1.05 to $1.25 per share on revenue of $5.5 billion to $6.3 billion. Wall Street had forecast a fourth-quarter profit of $1.09 per share on revenue of $5.76 billion.

Mollenkopf said in a conference call that the long-term licensing agreement with Huawei means that Qualcomm is now entering a period in which it has secured deals with every major handset maker for the foreseeable future. “I believe this significantly de-risks Qualcomm investors,” Moorhead said.

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that Qualcomm’s deal with Huawei could also offer some potential relief to other companies too.

“While it’s sensible for enterprises and governments to be wary of, and inquisitive about companies providing core communications infrastructure technologies, it’s also possible that political disagreements may be coloring the way some countries perceive and are dealing with businesses based in their rivals’ territories,” King said. “The Qualcomm/Huawei settlement suggests there are other avenues that commercial organizations can successfully explore and use to further their interests.”

Qualcomm said the expected reduction in fourth-quarter handset shipments because of COVID-19 could have a negative 25-cent impact on its earnings, however.

But Moorhead said that that downside pressure was outweighed by Qualcomm’s growing RF chipset business. “In fact, the company believes it will starts fiscal 2021 as one of the largest RF providers,” he said.

“Qualcomm keeps executing and is supported by its commitment to R&D and the growth spurts of 5G,” added Constellation Research Inc. analyst Holger Mueller. “Settling IP disputes like with Huawei this quarter is both the icing on the cake and also the inherent risk of the Qualcomm licensing business. Drawn-out lawsuits are the risks of that business and Qualcomm is riding that roller coaster.”

Photo: Fortune Brainstorm TECH/Flickr