Chipmaker Qualcomm signed a licensing pact with Xiaomi Technology that allows the Chinese smartphone maker to use its patents to make and sell 3G and 4G devices.
Xiaomi has enjoyed a rapid rise with handsets it touts as cheaper but well-designed alternatives to Apple's iPhones.
Shares of Qualcomm rose 3.6 percent to $51.07 in premarket trading on Wednesday.
Qualcomm said in November that it was facing delays in closing new licensing agreements in China and some Chinese customers were "improperly withholding" royalties on Qualcomm's patents by changing the way they report sales.
Up to Tuesday's close, Qualcomm stock had lost nearly a third of its value this year.
(Reporting by Alan John Koshy; Editing by Shounak Dasgupta)