Huawei plans to soon demand the payment of royalties from smartphone manufacturers that use its patented 5G technologies. The Shenzhen firm is claiming $ 2.5 per smartphone equipped with Huawei-branded 5G technology. The brand hopes to pocket up to $ 1.3 billion.
As you probably know, Huawei’s financial situation is not at its best. Due to the trade sanctions decreed by the Trump administration, the manufacturer has seen sales of its smartphones collapse in 2020. These difficulties are expected to continue in 2021, while some analysts predict a drop in sales to the tune of 42% this year .
In the 5G field, Huawei is not doing much better. Many countries have decided to exclude Huawei 5G equipment, such as Sweden and the United Kingdom. In France, all Huawei hardware must be gone by 2028. In fact, it is urgent for the brand to find new sources of revenue, such as the cloud, autonomous cars, or the development of technological solutions for the pig farming and coal mining.
However, we learn this Tuesday March 16, 2021 that Huawei intends to require the levy of a royalty from smartphone manufacturers in the near future. The principle ? Claim $ 2.5 in royalties for each smartphone that uses 5G technologies manufactured and patented by Huawei.
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Between 1.1 and 1.3 billion potential benefits
Through this process, Shenzhen firm hopes to pocket $ 1.1 billion to $ 1.3 billion. Enough to allow the company to put its finances back in the green for a while. The payment of this royalty will relate to the costs of patents and licenses issued between 2019 and 2021 and relating only to 5G technologies.
It should be noted that this practice is not new. Nokia, Ericsson and Qualcomm also claim royalties from manufacturers for each smartphone that embeds one of their technologies. Moreover and in order to motivate manufacturers to source from Huawei, the Chinese company clarified that these prices were lower than those charged by its competitors.
It is true that Nokia charges € 3 per smartphone, while Ericsson charges between $ 3 and $ 5 per device. As stated by GreyB, an American research firm, 18.3% of Huawei’s 5G patent families are SEPs (patents essential to a standard, in this case 5G) in use. Huawei is therefore perfectly right to claim these royalties.