Here's how much Huawei wants to charge for its 5G smartphone patents

Blocked from 5G network deployments and facing tumbling smartphone sales, Huawei is looking at its 5G patents as another source of revenue.

A year ago, Huawei was the world's top smartphone brand by global shipments, but US sanctions effectively cutting it off from Android and mobile chips have seen its shipments tumble. The company is now eyeing its 5G patents as a way to earn revenue from other companies selling 5G phones and equipment. 

Bloomberg reports that Huawei will start charging the likes of Apple and Samsung a "reasonable" fee for using its 5G patents in their smartphones. 

In a statement, Huawei said it estimates it will receive $1.2bn to $1.3bn in fees from rivals for patent-licensing fees between 2019 and 2021. 

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Jason Ding, head of Huawei's intellectual property rights department, said it will provide a "reasonable percentage royalty rate of the handset selling price, and a per unit royalty cap at US$2.5." 

The fees would apply to smartphones that can connect to 5G and earlier generation mobile networks.

The move by the Chinese tech company could offset some of the impact of the US Department of Commerce in 2019 blocking it from accessing technology from US firms like Google and Qualcomm.

Huawei shipped just 32 million smartphones in Q4 2020 compared to the 81.8 million iPhones Apple was estimated by Canalys to have sold. For the full year in 2020, Huawei shipped 188 million smartphones, including its recently sold budget Honor brand, compared to the 240 million it shipped in 2019. 

Huawei intends to be paid for its 5G patents despite the US blocking it from US technology supplies, according to Bloomberg. It's also promised to charge lower fees for its patents than network rivals Ericsson and Nokia. 

Huawei said American sanctions shouldn't prevent it from making cross-license deals with US companies.

"Huawei has been the largest technical contributor to 5G standards, and follows fair, reasonable and non-discriminatory (FRAND) principles when it comes to patent licensing," said Huawei's Ding.

"We hope that the royalty rate we announced today will increase 5G adoption by giving 5G implementers a more transparent cost structure that will inform their investment decisions moving forward."

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Huawei last month filed a lawsuit against the Federal Communications Commission (FCC) for designating the company as a national security threat in June 2020, which blocked rural network firms from using FCC funds to buy equipment from the company. 

The Biden administration hasn't cut Huawei any slack, either. Last week the Commerce Department imposed tighter restrictions on US companies with licenses allowing them to supply equipment to Huawei.  According to Reuters, the amended licenses prohibited the firms selling equipment for use "with or in any 5G devices".