Huawei announces 5G licensing strategy including low per unit royalty cap

The press release accompanying Huawei's March 2021 white paper on innovation and intellectual property reveals that Huawei will implement a $2.5 per unit cap on royalties it charges for a multi-mode 5G smartphone.

Although Huawei still estimates that it will receive more than 1 billion US dollars in revenue for the period 2019 to 2021, this cap suggests that Huawei will be seeking lower royalty rates than a number of other major SEP holders have done in the past. 

For example, the TCL v Ericsson case in the United States revealed that Ericsson's original offer to TCL for a 4G licence involved an $8 cap per device. 

Although Huawei has one of the largest 5G patent portfolios, it is also one of the world's largest smartphone manufacturers. It therefore faces a delicate balancing act in seeking to maximise its own licensing revenues while also limiting its exposure to licensing fees it has to pay out. 

By confirming that it will implement a relatively low per unit cap, Huawei is setting down a marker to the other major 5G SEP holders. However, it's also worth noting that this cap is only said to apply to smartphones.  The world of 5G licensing is likely to extend to numerous other connected devices and it will be very interesting to see if and how Huawei adapts its licensing approach for different devices.