With its consumer-facing business largely limited to the domestic market due to US sanctions, patent licensing has become an integral source of income for Huawei. The beleaguered Chinese tech behemoth holds thousands of patents across various industry sectors globally. It is the biggest patent holder in China and Europe, and the fifth-biggest in the US. The company licenses other companies to use these patented technologies and earns royalties. It made about $1.3 billion from patent licensing between 2019 to 2021. While we don’t have the number for 2022 yet, Huawei reportedly signed or renewed over 20 patent licensing deals this year. Companies paying the Chinese firm for its technologies include industry rivals Samsung, Nokia, and OPPO, as well as automaker giants Mercedes-Benz, Audi, Porsche, and BMW. These car companies are using Huawei technologies to improve the communications systems in their vehicles. Samsung, meanwhile, is obtaining 5G technologies from the handicapped Chinese company.
Huawei is making more money from patent licensing than ever
Huawei is also reportedly making money off patent cross-licensing deals, like the one it signed with its compatriot OPPO earlier this month. These deals allow companies to use each other’s patented technologies. in their products. But since Huawei sells fewer devices, it is getting cash to balance out the technology exchange. These kinds of agreements didn’t involve money in the past. So Huawei seems to have gotten aggressive with its patent licensing in recent years. “By getting a return on our R&D investment, it allows us to re-invest and re-invent,” said Steven Geiszler, Huawei’s US chief intellectual property counsel. The company is already making strategic investments in R&D (research and development) as part of its long-term plans. Nearly 55 percent of its employees reportedly work in R&D. We might see Huawei further improve its earnings from patent licensing in the coming years. Of course, the money that Huawei makes from patent licensing deals is nowhere near what it would have made from product sales if not for the US sanctions. The company was threatening to overthrow Samsung as the world’s largest smartphone maker. It was also growing rapidly in many other tech facets. But the sanctions that the Donal Trump-led US government imposed on Huawei have handicapped the company. Thankfully, patents are publicly disclosed technology and are not subject to those restrictions.
