Huawei seeks to generate revenues from patents as it signs dozens of licensing deals with companies like Nokia, BMW and Audi

The Shenzhen-based telecoms giant has signed more than 20 patent-licensing deals or extended such agreements this year
The company generated US$1.3 billion in revenue from licensing its patents between 2019 and 2021

Huawei

Iris Dengin Shenzhen

Published: 3:30pm, 23 Dec 2022

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Huawei Technologies Co is doubling down on monetising its patents through licensing deals with overseas companies, as the Chinese tech giant scrambles to seek new sources of revenue after US sanctions crippled its once-lucrative smartphone business.

On Friday, Huawei said it had extended a patent-licensing agreement with Finnish rival Nokia, but did not reveal the terms of the deal. The two network equipment makers had signed a licensing deal in 2017.

Huawei said this year it had signed more than 20 new patent licensing deals or extended agreements with companies in industries including smartphones, automobiles and telecommunications.

“We are delighted to see our technologies are helping the automotive and other vertical industries in their digitalisation,” said Alan Fan, head of Huawei’s intellectual property department. The royalties Huawei receives will in turn fund Huawei’s R&D efforts, he added.

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Huawei, the world’s largest telecoms equipment maker and formerly China’s biggest smartphone vendor, has been expanding its patent-licensing arrangements while it looks for new revenue streams after it was added to Washington’s trade blacklist in 2019.

Privately-held Huawei posted total 2021 revenue of 636.8 billion yuan (US$100 billion), a decline of 29 per cent from a year earlier, as sales from its consumer business, which includes smartphones, slumped 50 per cent to 243.4 billion yuan.

In automobiles, the Shenzhen-based company has reached royalty agreements with 15 carmakers globally, including Audi, Mercedes-Benz and BMW. Some 15 million connected cars worldwide will benefit from its patents this year, up from 8 million units in 2021, according to Huawei’s estimates.

The patents that Huawei has licensed to the carmakers mainly involve communications technologies such as 4G, but the terms of the deals vary, according to Fan.

The renewed deal with Nokia came after Huawei signed a cross-licensing agreement with Oppo, one of China’s top smartphone brands and Huawei’s old rival, on mobile technologies including 5G.

Huawei founder Ren Zhengfei told the company’s intellectual property (IP) team to step up efforts to turn its vast pool of patents into revenue via “reasonable pricing and “generate an appropriate return” on the R&D investments, according to a company memo made public in April.

Huawei founder Ren Zhengfei has asked the company’s intellectual property team to generate appropriate returns on the R&D investments. Photo: Kyodo

Total revenue generated from patent-licensing reached about US$1.3 billion between 2019 and 2021, and last year the company’s royalty income exceeded the expenses it paid for licensing technologies from other companies for the first time, according to Huawei.

However, Fan said the company is not treating IP licensing as a business or relying on it as a major revenue stream.

Huawei last year filed a record 6,952 patent applications, up 27 per cent from the previous year, through the Patent Cooperation Treaty (PCT) – an international patent law pact that provides a unified procedure for submissions. That made Huawei the world’s biggest PCT filer for five consecutive years.

The firm ranked first in terms of patents granted to private companies in China in 2021, followed by Chinese internet giant Tencent Holdings and Oppo, according to a report by the China National Intellectual Property Administration earlier this month.