Huawei to demand royalty payments on every 5G smartphone sale

Huawei to demand royalty payments on every 5G smartphone sale
  • The company aims at growing their revenue amidst the current complications caused due to sanctions imposed by US government

Huawei has reportedly announced that it will charge royalties from smartphone companies manufacturing 5G phones. The company claims to have over 100,000 active patents and it is said that they possess the worlds’ largest portfolio of IPs related to 5G.

Most of the innovations are Standard Essential Patents (SEPs) that partially make up the 5G standard. These SEPs must also be open to companies at FRAND (fair, reasonable and non-discriminatory) terms.

The Chinese mobile manufacturer has apparently stated that it plans to charge competitors at rates lower than other patent holders like Nokia, Qualcomm and Ericsson. They will possibly set a royalty amount of USD 2.5 per device. This plan is initiated with an aim to spur the market and reduce chances of disputes in the future. Nokia has also capped a royalty rate, but it is higher than that of Huawei’s.

This will help Huawei to earn over USD 1.3 billion on 5G devices that will be launched during 2019 and 2021.

Jason Ding, Head of Intellectual Property Rights Department at Huawei, has reportedly expressed that the company has been the biggest tech contributor when it comes to 5G standards and they follow FRAND principles in case of patent licensing.

He further added that the company hopes that the announcement of this royalty rate will help increase the adoption of 5G by providing the 5G-based implementers a transparent cost structure that will make it easier to for them to take investment decisions in the future.

This cap set by Huawei is not applicable to other types of products enabled by 5G. The company expressed that they plan to be as transparent as possible in the future.

This initiative offers assurance to manufacturers which will help in improving Huawei’s public image amid the ongoing US-China tussle where the company was deemed a national security threat by the US government.