Huawei To Begin Charging Royalty Rates For 5G

Huawei Technologies Co. on Tuesday announced royalty rates for the use of its 5G phone technology for the first time in a move its chief legal officer said was an effort to increase transparency at an event.

China’s largest technology company by revenue wants a seat at the table with tech giants vying to define the rapidly evolving field of connected cars, smart homes, and robotic surgery. As a result, Huawei will begin charging mobile giants like Apple and Samsung “a reasonable percentage royalty rate of the handset selling price, and a per-unit royalty cap” at $2.50, potentially creating a lucrative revenue source by showcasing its global lead in next-generation networking.

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The owner of the world’s largest portfolio of 5G patents will negotiate rates and potential cross-licensing with the iPhone maker and Samsung Electronics Co., Chief Legal Officer Song Liuping said. It aims to get paid despite U.S. efforts to block its network gear and shut it out of the supply chain but promised to charge lower rates than rivals like Qualcomm Inc., Ericsson AB, and Nokia Oyj.

Charging royalties on key patents related to cellular technology could help Huawei make up at least part of the revenue hit in other parts of its business, such as smartphones, as a result of U.S. sanctions. Huawei should rake in about $1.2 billion to $1.3 billion in patent and licensing fees between 2019 and 2021, executives said without specifying which of those stemmed from 5G. 

“It’s natural” for Huawei to collect on patents, Song Liuping told reporters in Shenzhen on Tuesday.