Huawei will charge Samsung and Apple for every smartphone sold using its 5G patents
Huawei is widely known as one of the world’s largest brands selling smartphones and other consumer electronics. Comparatively, fewer people know of Huawei as China’s richest technology company and the world’s largest manufacturer of telecom equipment. While the US trade ban has suppressed Huawei’s presence in the smartphone market, its leading research and innovation in the telecom space still hold the helm for the company. To create an alternate flow of income, Huawei will start licensing its 5G technology to other brands including Apple and Samsung.
In a recent report, Bloomberg notes Huawei’s Chief Legal Officer Song Liuping has announced that the company plans to negotiate cross-licensing rates for its 5G patents with Apple and Samsung. The Chinese giant aims to garner payment between $1.2 billion to $1.3 billion in the form of licensing fees between 2019 and 2021, as per the executive who did not clarify the share of 5G patents in this revenue.
Meanwhile, Huawei has also promised to charge lower licensing fees than its competitors in the telecom equipment space including Nokia, Qualcomm, and Ericsson. Jason Ding, who leads the intellectual property department at Huawei, told Bloomberg that the company intends to cap royalties to $2.50 per smartphone, which is only a small percentage of the $7.50 rate that Qualcomm currently charges Apple with. In addition to smartphones, these patents will also be leveraged for connected devices and future innovations such as smart homes, autonomous cars, and other robotic equipment used in industries as well as healthcare.
Huawei’s executives stressed the US Sanctions enforced by the Trump administration in May 2019 cannot prevent it from being paid for its intellectual property, even if the 5G infrastructure is developed by another company.
Meanwhile, Bloomberg also predicts the disputes over what components of basic 5G technology can companies like Huawei or Qualcomm control as it becomes more and more standard. The global revenue from the sale of 5G-enabled devices is predicted to grow from just $5.5 billion in 2020 to $668 billion in 2026, as per Allied Market Research. More than anything, this explosive growth means there will be more disputes between companies on what is a free standard and what warrants payment of royalties.