Huawei reveals 4G, Wi-fi 6 rates as it looks to leverage vast patent pool to bolster revenue
- Huawei launched a website showing rates for some of its most important communications technologies, as it seeks to greater leverage its huge patent pool
- The telecoms equipment maker has been earning more on IP than it spends on licensing since 2021, the result of declining smartphone sales amid US sanctions
The telecoms gear maker collected about US$560 million from patent royalties in 2022, exceeding its expenses from licensing tech from other companies, Alan Fan, vice-president and head of intellectual property (IP) at Huawei, announced during an event at the company’s Shenzhen headquarters on Thursday.
As of 2021, Huawei is the leading owner of patents related to 5G and Wi-fi 6, two widely used modern communications technologies, according to analytics firm IPlytics. The company is now looking to leverage that position into greater revenue, but Fan said he expects patent licensing revenue to remain stable this year with just a small increase.
“Setting the rates too high would be over protective, and setting it too low would impede the motivation for innovation,” Fan said during a media briefing on Wednesday. “We will use a balanced approach in setting our licensing rates.”
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On Thursday, Huawei announced for the first time the rates it charges for some of its most important communications tech. Companies using its 4G tech pay up to US$1.50 per unit for mobile devices, while products using Huawei’s Wi-fi 6 standards earn the company US$0.50 per unit. Its rates for 5G devices, which Huawei previously revealed, are capped at US$2.50 per unit.
For Internet of Things (IoT) devices such as smart sensors and trackers using its cellular tech, the company collects 1 per cent of the selling price up to US$0.75 per unit. Devices such as shared bikes that are enhanced by IoT technology have rates ranging from US$0.30 to US$1, depending on the wireless capacity of the technology.
The company has also launched a new webpage, where the public can monitor Huawei’s licensing rates.
Since its founding in 1987, Huawei grew to become a giant in the telecoms hardware space in the 2000s largely by undercutting the international competition on price. With Chinese technology now facing greater scrutiny overseas, particularly in the US and Europe, Huawei’s intellectual property holdings could help the company weather declining sales in other areas.
Throughout the company’s entire history, though, it has paid three times more in licensing fees than the amount of revenue it has derived from IP, according to Fan.
While Huawei is seeking to expand licensing, Fan has previously said the company is not looking for it to become a revenue driver the way it is for some of its rivals. Licensing fees accounted for just 0.6 per cent of Huawei’s total revenue last year, compared with 16 per cent for Qualcomm, the US mobile chip giant, which raked in US$7 billion from such fees in 2022.
In a memo to the company last year, Huawei founder Ren Zhengfei told the IP team to step up efforts to better monetise its vast patent pool through “reasonable pricing” and “generate an appropriate return” on research and development.
Huawei’s 2022 revenue was 642.3 billion yuan (US$89.4 billion), growing 0.9 per cent over the previous year. Despite stagnating sales growth, the company has touted its continued R&D investments, which reached 161.5 billion yuan last year, making up a quarter of annual revenue, its highest ratio ever.
