Pricing Reveals True Value of Huawei’s 5G Patents

A worker talks on the phone in a Huawei store in Beijing, China, on July 15, 2020. Ng Han Guan/AP Photo

Huawei finally revealed on March 16 that it will charge up to $2.5 in royalties per phone for its 5G patents, a price lower than its competitors although the company has 3,147 declared 5G patent families, the highest in the world.

Huawei’s rivals have much higher royalty charges for the 5G patents they own. For example, Qualcomm made its announcement in 2018 that it will charge over $13 in royalties per phone for its 5G patents. Nokia and Ericsson also announced in 2018 that they will charge about $3.5 and $2.50 to $5 respectively for every phone that uses their 5G patents.

Since every developer of 5G technology has its own SEPs (Standard Essential Patents), which a 5G cellphone manufacture has to license to make the cellphone, the higher the quality of the SEPs, the higher royalties a developer can charge.

Huawei had been silent on its royalty fee for a long time, even after most of its competitors announced their pricing. Ren Zhengfei, founder and CEO of Huawei, said in August 2019 that Huawei is the global leader in 5G technology and was looking for a rival to compete with. Ren said Huawei would rather foster a competitor, preferably in United States, by transferring instead of licensing Huawei’s 5G technology to it.

Meanwhile, Huawei has been described as the global leader of 5G technology with the biggest 5G patent portfolio by Chinese government propaganda and almost all U.S. establishment media. Many of those reports are based on a study made by a patent analysis firm called “IPLytics.” The report claimed that Huawei is the global leader since it owns the most 5G patent applications globally—15.39 percent of 5G SEPs in total, or 3,147 families. However, a patent application often does not result in a granted patent, and 73 percent of Huawei’s 5G patent applications are registered in China.

Based on the same raw data in the IPLytics’ study, counting patents granted in the United States only, the company rankings are markedly different. Samsung ranks first, owning 1,728 families of 5G patents, followed by Nokia with 1,433 families, LG with 1,415 families, Qualcomm with 831 families, Ericsson with 748 families, and Huawei with 681 families.

The total value of 5G patents is the number of patents multiplied by the qualities of the patents. The 5G patent royalty fee Huawei just announced reveals its real position among global competitors of 5G technology.