As the 5G patent race continues, Huawei will begin charging smartphone makers a royalty to use its patented technology.
5G technology could be critically important for future tech, especially in areas such as smart manufacturing, smart cities, medical devices and autonomous vehicles. And as the race to roll out 5G technologies continues, the battle for patents in this area of comms is intensifying.
Chinese tech giant Huawei is leading the charge when it comes to granted and pending 5G patent applications worldwide.
A recent report from IPlytics put its market share at 15pc, ahead of Qualcomm, ZTE, Samsung and Nokia. Many of these are standards essential patents, or SEPs, that form part of the 5G standard and must be made available to other companies on fair terms.
Now Huawei will begin charging smartphone makers a royalty to use its patented 5G technology. Last month, the company announced plans to charge smartphone makers a “reasonable percentage royalty rate” of the handset selling price and a per unit royalty cap at $2.50.
This per unit royalty cap is lower than that of some of its competitors, including Nokia, which announced a royalty cap of $3.48 in 2018.
What does this mean?
The royalties charge means Huawei has created a potentially lucrative revenue source in the face of challenges such as a particularly turbulent relationship with the US, a number of countries blocking Huawei tech from their 5G networks, and slowing revenue growth amid trade tensions.
Announcing the charge, the head of Huawei’s intellectual property rights department, Jason Ding, said the company hopes the rate will increase 5G adoption by giving implementers “a more transparent cost structure that will inform their investment decisions moving forward”.
“Huawei has been the largest technical contributor to 5G standards, and follows fair, reasonable and non-discriminatory principles when it comes to patent licensing,” he added.
The company is estimated to take in between $1.2bn and $1.3bn between 2019 and 2021 from patent licensing. The $2.50 cap only applies to smartphones.
According to a recent white paper from Huawei, it had more than 100,000 active patents worldwide by the end of 2020, which it attributed to long-term investment in innovation and R&D.
Earlier this year, Huawei founder Ren Zhengfei spoke about plans to transfer Huawei’s 5G technologies to other devices.
“Everything that connects people or things are devices. That includes things like laser radar, ultrasonic radar and Doppler radar for self-driving vehicles, as well as household gas meters, water meters, TVs and security systems,” he said.
“Mobile phones are only one part of the device category. So, Huawei may transfer our 5G technologies to others in the future but will never sell our device business.”