Wireless technology company Qualcomm has inked a technology licensing deal with smartphone maker Xiaomi - a major Chinese firm that previously balked at paying royalties for use of the San Diego company's patents.

The deal announced Wednesday means that four of the top five Chinese handset makers have now agreed to license Qualcomm's patents, according to analysts.

The news sent Qualcomm's shares up 5.5 percent to $52.10 in late day trading Wednesday on the Nasdaq exchange.

Qualcomm has signed a patent licensing deal with Xiaomi. David Paul Morris

Patent licensing produces the bulk of Qualcomm's $5.3 billion annual profit, while wireless chip sales account for most of its $25.3 billion in revenue.

Last month, Qualcomm revealed that it was having trouble collecting patent royalties from some Chinese phone makers, even after a February settlement with that country's anti-monopoly regulator - the National Development and Reform Commission (NDRC).