Huawei announces 5G royalty rates for smartphone makers

Royalty cap” of $2.50 for smartphones capable of connections to 5G and previous generations of mobile networks is lower than some competitors

Huawei announces 5G royalty rates for smartphone makers
A man inspects a Huawei Mate X2 at a Huawei booth during the Mobile World Congress in Shanghai on February 23, 2021. Photo: Hector Retamal / AFP.

(ATF) Huawei Technologies has announced royalty rates for the use of its 5G phone technology for the first time, in a move its chief legal officer said was an effort to increase transparency at an event on Tuesday. 

The company said it will charge “a reasonable percentage royalty rate of the handset selling price, and a per unit royalty cap” of $2.50 for smartphones capable of connections to 5G and previous generations of mobile networks. 

This price is lower than some of Huawei’s competitors including Finnish telecoms company Nokia.

The company was put on an export blacklist by former US President Donald Trump in 2019 and barred from accessing critical technology of US origin, affecting its ability to design its own chips and source components from outside vendors. 

Meanwhile, a number of countries such as the US and Australia have blocked Huawei gear from being part of their respective 5G networks. 

But, Huawei is looking to showcase its own research achievements, with the company expecting to receive about $1.2 billion to $1.3 billion in revenue from patent licensing between 2019 and 2021, according to its head of IP, Jason Ding. 

In the past, Huawei has charged royalties to companies such as AT&T, Qualcomm, and Apple.

Along with rivals Samsung Electronics, Nokia, Ericsson, and chipmaker Qualcomm, Huawei is one of the leaders in 5G patents, although studies about which company is ahead in the race vary.

Lower than some rivals

Huawei’s $2.50 cap on royalties for smartphone makers is on the lower end compared to its rivals.

In 2018, Nokia said the licensing rate for its 5G SEP portfolio will be capped at 3 euro ($3.58) per device. Ericsson said it will charge $2.50 to $5 per device. 

Huawei achieved positive growth for both 2020 revenue and net profit, the company’s founder and CEO Ren Zhengfei had said in February, adding that the company continued to see significant levels of confidence from its customers.

Yet, the company’s smartphone shipments have plunged under intense pressure due to the US ban. 

The company is expected to reveal full 2020 figures at the end of the month. Its revenue for 2019 totaled 858.8 billion yuan ($122.97 billon) while net profit came in at 62.7 billion yuan. 

By the end of 2020, Huawei held more than 100,000 active patents in over 40,000 patent families worldwide, the company said. Its R&D investments totalled 131.7 billion yuan ($20.27 billion) in 2019.

With reporting from Reuters

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