Huawei Technologies Co has agreed to license some of its smartphone technologies to an old rival as it struggles to make money after its lucrative handset business was hit by US trade sanctions that have cut off its access to advanced chips.
The Shenzhen-based telecoms giant and Oppo, one of China’s top smartphone brands, said on Friday that they had agreed a “patent cross-licensing” deal covering technologies including 5G.
The deal comes as Huawei struggles to make money from its assets, including its patent pool, as revenues and profit shrink – mainly due to US pressure. The financial terms of the deal, which Huawei said is its largest cross-licensing agreement with a Chinese company, were not disclosed.
Alan Fan, head of Huawei’s intellectual property department, did not elaborate on the specific patents involved in the deal. The partnership is “a win-win deal” for both companies as it demonstrates the recognition and respect for each other’s intellectual property (IP), Adler Feng, Oppo’s chief intellectual property officer, said in a statement.
Huawei has recently been working to expand its patent licensing arrangements. The world’s largest telecoms equipment maker and formerly China’s biggest smartphone vendor, was added to Washington’s trade blacklist in 2019 and has attempted to diversify its revenue streams by moving into areas such as autos and enterprise services.
Huawei founder Ren Zhengfei told the company’s IP team to step up efforts to turn its vast pool of patents into revenue via “reasonable pricing” and “generate an appropriate return” on the company’s research and development investments, according to a company memo made public in April.
Huawei estimated that total sales generated from patent licensing reached about US$1.3 billion between 2019 and 2021. Fan expects this to increase further but emphasised that the company will not rely on these royalties as a major source of revenue.
Huawei expects to sign around 20 new patent licensing deals in 2022, including extensions with past licensees such as Samsung Electronics, said Fan. Huawei is in talks with other Chinese and foreign companies about licensing patents, Fan said.
Huawei estimates that 350 million 5G smartphones and 15 million connected cars will benefit from Huawei’s patent licences this year.
Huawei ranked first in terms of patents granted to private companies in China in 2021, followed by Chinese internet giant Tencent Holdings and Oppo, according to a report by the China National Intellectual Property Administration on Monday.
Huawei last year filed a record 6,952 patent applications, up 27 per cent from the previous year, through the Patent Cooperation Treaty (PCT) – an international patent law pact that provides a unified procedure for submissions. That made Huawei the world’s biggest PCT filer for five consecutive years.