Qualcomm on Monday agreed to pay a record $975m fine to settle allegations by Chinese authorities that it violated the country’s anti-monopoly law, ending a two-year patents fight and helping send its shares up 3 per cent in after-market trading.

The deal allowed the US chipmaker to raise its revenue guidance for fiscal year 2015 to at least $26.3bn, up from $26bn, partly because it will make it easier to collect royalties from some Chinese manufacturers that had been underreporting their use of Qualcomm patents. Under the terms Qualcomm will cut the amount it charges Chinese manufacturers to license some of its patented technologies.

Analysts said the resolution with China’s National Development and Reform Commission was not as harsh as it could have been. Qualcomm depends heavily on revenue from licensing its patents and counts China as a key market given the number of fast-growing Chinese electronics manufacturers.

The Qualcomm patents at the heart of the case, which address how phones connect to 3G and 4G networks, will now cost less to license in China than in other markets, though the discount will cover phones to be sold in China and not made for export.

The case highlights the increasing problems that foreign companies, particular tech groups, have been having in China. Officials have been encouraging state companies and government agencies to buy locally made goods, often citing concerns about cyber security and the possibility of foreign intelligence agencies gathering data from US and European-made devices.

Qualcomm, whose chips are found in most of the world’s smartphones, said the fine would cut 58 cents from its earnings per share for fiscal year 2015, reducing a forecast $4.04 to $4.34 to $3.56 to $3.76.