Huawei discloses 5G smartphone patent royalty caps

huawei logo at mwc 19
Huawei expects to garner $1.2 billion to $1.3 billion in revenue from patent licensing between 2019 and 2020. (Huawei)

Huawei released the license fee structure for 5G handsets that use its standard essential patents.

Jason Ding, head of Huawei’s Intellectual Property Rights Department, said the company will provide “a reasonable percentage royalty rate of the handset selling price,” for every multi-mode 5G smartphone, with a per unit royalty cap of $2.50.

Ding said at an event Tuesday, "we hope that the royalty rate we announced today will increase 5G adoption by giving 5G implementers a more transparent cost structure that will inform their investment decisions moving forward."

Huawei expects to garner $1.2 billion to $1.3 billion in revenue from patent licensing between 2019 and 2020. 

Licensing standard essential patents (SEP) and collecting royalties is something others like Ericsson, Nokia, Samsung, and Qualcomm all do, after investing in R&D and contributing to global standards.  

Patent rows aren’t uncommon though. Apple and Qualcomm finally ended long-running litigation against each other in 2019 related to royalties, while Ericsson and Samsung have their own ongoing patent licensing dispute related to 4G and 5G technology.

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Huawei announced a white paper on Intellectual Property and shared highlights from an event held at the company’s headquarters in Shenzhen, including comments from Francis Gurry, former Director General of World Intellectual Property Organization (WIPO) from 2008 through September 2020.

“In releasing its license fee structure for 5G standard essential patents, Huawei is promoting the widespread adoption and use of standards designed to ensure interoperability, reliability and transparent competition, while at the same time providing a fair return for investment in R&D,” Gurry stated.  

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In the later part of 2020 Huawei’s handset business lost significant market share as U.S. sanctions impacted its access to 5G components, according to Counterpoint Research.

“Huawei and HONOR combined were still the market leader in China’s market, capturing 41% share in 2020,” Counterpoint Research analyst Flora Tang commented on the competitive landscape in China. “However, following component shortages after the US trade sanctions effective September 15, sales of Huawei and HONOR dropped a staggering 26% YoY in Q4 2020. Their combined market share also slipped to 32% in the same quarter.”

In January 2021, the research firm found that Oppo became the top smartphone brand in China for the first time, benefiting in part by Huawei’s declines.