Huawei will begin charging smartphone makers a royalty to use its patented 5G technology as the Chinese technology firm looks to open a new revenue stream, even as other parts of its business have taken a hit due to U.S. sanctions.
The company said that it will charge “a reasonable percentage royalty rate of the handset selling price, and a per unit royalty cap” at $2.50 for smartphones capable of connections to 5G and previous generations of mobile networks.
To put that fee in perspective, it’s less than rivals like Nokia and Ericsson currently charge companies to access their 5G tech and significantly less than the $7.50 per device fee that famously led to years of litigation between Apple and Qualcomm. Huawei estimates the strategy will help it generate as much as $1.3 billion in additional revenue between 2019 and the end of 2021.
According to CNBC, it’s estimated 18.3 percent of Huawei’s 5G patent families fall under the Standard Essential Patent category. As the name suggests, those are critical to wireless network standards like 5G and LTE. In many cases, phone manufacturers can’t make a phone that can access those networks without licensing some of those patents. And as it just so happens, Huawei has the most in use 5G-related SEPs of any company in the world.
Historically, Huawei hasn’t gone out of its way to license its patent portfolio — or, for that matter, use it to litigate its competitors. But that was before the Trump administration put the company on the Commerce Department’s entity list, preventing US companies (and even some outside of North America) from working with Huawei. Under former President Trump, the US also put pressure on allies like the UK to stop buying network equipment from the company. Those measures have had a tangible Huawei’s business, even in its own home country.
