US-China tech war: Huawei pushes licensing of 5G mobile technology amid struggles with Washington’s trade sanctions

Telecommunications giant Huawei ‘will not seek a royalty rate higher than US$2.50’ per 5G smartphone
The company’s revenue from patent licensing between 2019 and 2021 was estimated to be ‘about US$1.2 billion to US$1.3 billion’

Huawei

Yujie Xue

Published: 7:42pm, 16 Mar 2021

Why you can trust SCMP

Huawei Technologies Co on Tuesday revealed the royalty rate for licensing its 5G mobile technology for the first time, days after a US government regulator designated the telecommunications giant and four other Chinese companies “a threat to national security”.

The 5G licensing push was announced by Jason Ding, the head of intellectual property at Huawei, in a speech on Tuesday at an innovation forum in Shenzhen, where the company introduced its latest intellectual property (IP) white paper.

“We believe licensing should balance return on investment and cost pressures of implementation in the industry,” Ding said. “For every phone that complies with 5G standards, we will not seek a royalty rate higher than US$2.5 per unit.”

Huawei hopes that the rate “will give implementers of 5G technology a clear number they can rely on for cost estimation and investment decisions”, he said. “Our goal is to promote broader adoption of 5G across all industries.”

The company, which was put on Washington’s trade blacklist in 2019, has been the largest technical contributor to global 5G standards, according to Ding. He said the company’s revenue from patent licensing between 2019 and 2021 was estimated to be “about US$1.2 billion to US$1.3 billion”.

The announcement comes less than two years since Huawei founder and chief executive Ren Zhengfei offered to license the company’s 5G technology to an American company to create a powerful new competitor that could develop its own large-scale market. There were no takers in the US, however, because the offer did not address Washington’s long-standing security concerns about Huawei, which the company has repeatedly denied.

The renewed push to widely license its 5G technology and generate significant revenue shows how much Huawei, with about 194,000 employees and operations in 170 countries, has been struggling under the US trade blacklist. Amid rising US-China tensions, tighter restrictions were imposed on Huawei last year, covering access to advanced chips developed or produced using US technology, from anywhere.

Huawei, the world’s largest telecoms equipment supplier and one of China’s biggest smartphone vendors, is now moving to overhaul its manufacturing strategy. Ren, 76, said at the company’s 2021 working conference that it must try to use “third-class” components to manufacture “first-class” products amid stifling US trade restrictions.

Beyond that situation, Huawei’s Ding on Tuesday described how the company has been active in licensing activities. “This isn’t just from telecoms infrastructure and smart devices,” he said. “We have also started licensing IoT [Internet of Things] technologies for vertical industries. The goal is to enable more businesses to adopt digital technology and upgrade their industry.”

He indicated that Huawei, which “held over 100,000 active patents in more than 40,000 patent families worldwide”, has been committed to open innovation over the past 30 years. “We respect the IP of others and pay licensing fees to use their IP according to international rules,” he said. “We were one of the first companies in China to sign licensing agreements with Western companies to use their IP, like Qualcomm in 2001 and Ericsson in 2002.”

US imposes new 5G limits on Huawei suppliers

At its IP white paper launch on Tuesday, Huawei also announced that it has entered into more than 100 patent licence and cross-licence agreements with major global information and communications technology companies across Europe, the US, Japan, and South Korea.

“Huawei is an active member of more than 400 standards organisations and industry alliances,” said Song Liuping, Huawei’s chief legal officer. “Every year, we submit more than 6,000 contributions to international standards organisations.”