Chinese telecommunications giant Huawei will begin collecting royalties from smartphone makers using its patented 5G technology. Huawei charging for its 5G technology is seen as a way to increase revenue, which has been declining since it was named a national security risk in the US.
It said it would charge a reasonable percentage royalty rate of the handset selling price and a per-unit royalty cap at $2.50 for 5G capable phones and even those that can plug into previous generations of mobile networks.
Charging for patent technology is not new, as is a common practice done by different industry players.
Although the move is seen as part of the company’s plan to make up for different declining business categories, it’s royalty charges are reportedly less than competitors like Nokia. Previously, the Chinese technology company expected to receive over a billion dollars – about $1.2 billion to $1.3 billion – from 2019 to 2021.
Huawei, which holds 3,007 patents on 5G technology, according to data from intellectual property research organization GreyB, is the highest in the industry. Other companies with a substantial portfolio of 5G patents include Samsung, LG Electronics, Nokia, Ericsson and Qualcomm.
US sanctions have hit Huawei’s business. Before that, the company was in a race to become the leading technology company in different industry categories, including smartphones.
However, the US has accused Huawei of being a national security threat for a long time, an allegation the Chinese tech company has repeatedly denied.
The 2019 addition to the Entity of List restricted the company from using specific American technology in its products. Last year’s stricter follow-up restrictions cut the company from crucial supply chains, which has immensely negatively affected its business.