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Huawei to start charging smartphone makers for its 5G patents
sixteen.03.2021 [14:52],
Konstantin Khodakovsky

Huawei to start charging smartphone makers for licensing fees for its patented 5G technology: Chinese company under severe US sanctions hopes to generate additional revenue in this way. The company said it will charge a reasonable royalty rate on the selling price of the smartphone and reach $ 2.5 per 5G device.

Dado Ruvic | Reuters

Charging royalties on key cellular technology patents could help Huawei offset at least some of the damages incurred as a result of US sanctions. Huawei has already collected royalties from companies like Apple in the past.

When a new generation of cellular technology is developed, common standards need to be developed. These are the protocols, specifications and schematics that make 5G networks interoperable around the world and enable smartphones to interact with those networks. Standards creation is entrusted to standards bodies, and companies like Huawei, Nokia Ericsson, Qualcomm and many others are contributing to the standards development process.

In the process, companies create and patent various technologies. Patents that are critical to 4G or 5G standards are called SEP (standard essential patent). If, for example, a smartphone maker wants to launch a 5G phone, it will most likely have to use the SEP of one or more of the companies that created the standard. In turn, these companies can claim royalties. This practice has been around for a long time.

Huawei has 3,007 5G patent families, the highest of any company in the world. Patent families are a group of the same or similar patents filed in different countries. GreyB estimates that about 18.3% of these Huawei 5G patent families are SEP, meaning the Chinese company’s contribution to next-generation cellular technology is enormous. Other major patent holders are Samsung, LG Electronics, Nokia, Ericsson and Qualcomm.

Huawei’s maximum royalty of $ 2.5 per unit is lower compared to competitors. In 20221, Nokia capped the maximum value for the use of its technology at € 3, and Ericsson at $ 5. Huawei charges royalties for 4G patents. The Chinese firm estimates that from 2021 to 2021 it will receive $ 1.2-1.3 billion in revenue from patent licensing.

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