Huawei Technologies is looking to squeeze more revenue out of its massive patent portfolio, revealing 4G and Wi-fi rates for the first time. The company collected about USD560 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. 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. “We will use a balanced approach in setting our licensing rates.”
Companies using Huawei's 4G tech pay up to USD1.50 per unit for mobile devices, while products designed according to Huawei’s Wi-fi 6 standards earn the company USD0.50 per unit. Its rates for 5G devices, which Huawei previously revealed, are capped at USD2.50 per unit. For Internet of Things (IoT) devices such as smart sensors and trackers using its cellular tech, the company collects 1% of the selling price up to USD0.75 per unit. Devices such as shared bikes that are enhanced by IoT technology have rates ranging from USD0.30 to USD1, 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 U.S. and Europe, Huawei’s intellectual property holdings could help the company weather declining sales in other areas.
Huawei’s annual income from royalties exceeded IP expenses for the first time in 2021, when it faced a sharp decline in handset sales as a result of being placed on the U.S. Entity List in 2019, cutting it off from advanced 5G semiconductors and other technologies. Throughout the company’s entire history it has paid three times more in licensing fees than the amount of revenue it has derived from IP, according to Fan. Licensing fees accounted for just 0.6% of Huawei’s total revenue last year, compared with 16% for Qualcomm. Huawei’s 2022 revenue was CNY642.3 billion, growing 0.9% over the previous year. R&D investments reached CNY161.5 billion last year, making up a quarter of annual revenue, the South China Morning Post reports.
Meanwhile, Huawei has launched a new AI model Pangu 3.0 during the Huawei Developer Conference 2023, marking a fresh update of its self-developed large language model amid a global rush to develop in ChatGPT services. The Pangu model has been proven to provide significant value in various industries, including finance, manufacturing, pharmaceutical research and development, coal mining, and railway sectors, Zhang Pingan, Executive Director of Huawei and CEO of Huawei Cloud, said.
