Huawei says it will start charging royalties on every 5G phone sold

(Image credit: Future)

Huawei is to demand royalties from 5G smartphone manufacturers as it seeks to grow its revenues in the face of ongoing difficulties caused by US government sanctions.

The Chinese mobile giant claims to have more than 100,000 active patents and it is thought the company has the world’s largest portfolio of 5G-related IP.

Many of these innovations are Standards Essential Patents (SEPs) that form part of the 5G standard and must be made available to other companies at fair, reasonable and non-discriminatory (FRAND) terms.

Huawei patents

The company says it plans to charge its competitors rates that are below other patent holders, such as Ericsson, Nokia and Qualcomm, and will cap royalty payments at $2.50 per device. It is hoped that this cap will stimulate the market and reduced the possibility of any future disputes. Nokia has also imposed a capped rate, albeit a higher one of €3 ($3.57) per device.

It is thought Huawei will earn up to $1.3 billion on 5G devices launched between 2019 and 2021.

“Huawei has been the largest technical contributor to 5G standards, and follows FRAND principles when it comes to patent licensing," said Jason Ding Head of Huawei's Intellectual Property Rights Department.

“We hope that the royalty rate we announced today will increase 5G adoption by giving 5G implementers a more transparent cost structure that will inform their investment decisions moving forward.”

Huawei’s cap does not apply to other categories of 5G-enabled products, but the company says it plans to be as transparent as possible going forward. This approach will not just provide greater certainty to manufacturers but will also potentially improve the public image of Huawei which is judged to be a national security risk by the US government.

American firms are banned from doing business with the company, a move which has severely limited access to technologies and components.

Ding’s comments came at a virtual launch event for a new whitepaper on Huawei’s innovation and IP activities that details its investments in R&D over the past 30 years.

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.