Huawei will use its 5G patents to make money off of other companies

Increasingly shut out from both the international phone and infrastructure markets, Huawei plans to monetize its patent portfolio more aggressively. The company said it would charge phone makers like Apple a “reasonable” royalty fee capped at $2.50 per device to license its collection of 5G patents.

To put that fee in perspective, it’s less than rivals like Nokia and Ericsson currently charge companies to access their 5G tech and significantly less than the $7.50 per device fee that famously led to years of litigation between Apple and Qualcomm. Huawei estimates the strategy will help it generate as much as $1.3 billion in additional revenue between 2019 and the end of 2021.

According to CNBC, it’s estimated 18.3 percent of Huawei’s 5G patent families fall under the Standard Essential Patent category. As the name suggests, those are critical to wireless network standards like 5G and LTE. In many cases, phone manufacturers can’t make a phone that can access those networks without licensing some of those patents. And as it just so happens, Huawei has the most in use 5G-related SEPs of any company in the world.

Historically, Huawei hasn’t gone out of its way to license its patent portfolio — or, for that matter, use it to litigate its competitors. But that was before the Trump administration put the company on the Commerce Department’s entity list, preventing US companies (and even some outside of North America) from working with Huawei. Under former President Trump, the US also put pressure on allies like the UK to stop buying network equipment from the company. Those measures have had a tangible Huawei’s business, even in its own home country.