Huawei Technologies Co. made $560 million in revenue from its patent licensing deals last year, disclosing for the first time its annual income from that part of the business.
(Bloomberg) — Huawei Technologies Co. made $560 million in revenue from its patent licensing deals last year, disclosing for the first time its annual income from that part of the business.
The Shenzhen-based company has collected slightly more in royalties than it paid out over the past two years because of its falling smartphone sales, according to Alan Fan, head of its intellectual property rights department. Huawei has had to remake itself after Washington’s strict sanctions cut off its access to a wide spectrum of chips and software using American technology.
The firm controls some of the key patents in wireless communications, where cross-licensing of technologies is a common practice among competitors. As one of the 5G pioneers, it’s signed patent agreements with global leaders like smartphone maker Samsung Electronics Co. and auto marque Mercedes-Benz Group AG.
“Huawei seeks a balanced stance in collecting royalties,” Fan said. “Product sales are also essential for us, so we don’t think it’s reasonable to ask excessive amounts for patent fees.”
Licensing royalties are usually collected on the basis of the number of devices a company sells. The royalty gains will be used to fund Huawei’s research and development efforts, according to Fan. The company spent one quarter of its 2022 sales, about 161.5 billion yuan ($22.5 billion), on R&D last year.
Top Huawei executives have sought to reassure the wireless industry that it has no intention to weaponize its patent trove to counter US sanctions. The company pledged to cap the maximum royalty charges it would ask for a number of products, ranging from smartphones to WiFi technologies. The rate cap for 5G handsets is $2.50 per unit, the company said.
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