Although it has so far managed to keep operating, it’s hard to deny that Huawei’s business has taken a significant hit in the past years. In addition to sanctions imposed by the US government over allegations of its role in Chinese espionage, Huawei has also seen its networking technologies and equipment pushed out of other countries’ 5G plans. To recoup losses and perhaps to indirectly show how critical it is to 5G’s development, Huawei will soon make smartphone makers like Apple and Samsung pay for patent royalties, the majority of which revolve around 5G technologies.
The patent system today is a bit of a two-edged sword but, as it stands, Huawei is definitely within its legal rights to start charging for those patents. According to intellectual property research firm GreyB, Huawei happens to have the highest number of declared 5G “standard essential patents”, beating others like Samsung, Nokia, Ericsson, and even Qualcomm. As it also happens, Huawei’s 5G patents are also the most widely used in smartphones today, even if they’re using Qualcomm’s 5G modems.
Given the circumstances, Huawei has been pushed to start charging for the use of those intellectual properties. The rate it will be charging will depend on the handset selling price but it promises that it will be capped at $2.50. According to CNBC’s report, that’s actually the lowest among other 5G patent holders like Nokia who capped its royalties at $3.58.
Those fees, however, are applied to each and every single smartphone sold. All in all, Huawei is expecting to gain up to $1.3 billion in revenue from patent licensing between 2019 and 2021. That figure, however, doesn’t just apply to 5G patents but other Huawei IPs in use as well, including those for 4G, for example.
Although it is definitely a legitimate source of income, it’s hard for analysts and market observers not to paint this as part of Huawei’s desperation to recover from losses in the past years. In addition to restrictions in certain markets, Huawei’s supply chain is also getting slimmer, calling into question the company’s ability to manufacture new products in the near future.