Huawei Patent-licensing Deals to Diversify Revenue Amid US Sanctions

As the Chinese tech giant scrambles for new revenue sources after US sanctions disrupted its once-lucrative smartphone sector, Huawei is reportedly diversifying revenue streams by doubling down on monetizing its patents through licensing partnerships with overseas companies.

According to the South China Morning Post, Huawei said on Friday that it had extended a patent-licensing agreement with Finnish competition Nokia but did not disclose the terms of the agreement. In 2017, the two network equipment manufacturers signed a licensing agreement.

Huawei Doubles Down on Licensing Deals

Huawei has signed over 20 new patent licensing deals or extended agreements with companies across various industries, including smartphones, automobiles, and telecommunications.

These deals will allow Huawei to receive royalties that the tech company will use to fund its research and development efforts. Alan Fan, head of Huawei's intellectual property department, stated that the company is "delighted" to see its technologies used to support the digitalization of the automotive and other industries.

This news is a positive development for Huawei as it continues to navigate the complex and ever-changing technological landscape.

The US Commerce Department included Huawei Technologies Co Ltd and 70 affiliates in its so-called "Entity List" in May 2019, effectively prohibiting the telecom giant from purchasing materials and components from US companies without prior approval from the US government.

U.S. officials told Reuters the decision would make it difficult, if not impossible, for Huawei, the world's largest telecoms equipment provider, to sell some goods because of its reliance on US suppliers.

Since the aforementioned blacklisting, the Chinese IT giant has already looked into alternative cash streams. One of these approaches is to concentrate on licensing agreements. Huawei reported total 2021 revenue of US$100 billion, a 29% decrease from the previous year, while sales from its consumer division, which includes smartphones, fell 50% to US$33.5 billion.

Notable Licensing Deals

In the automotive industry, Huawei has reached royalty agreements with 15 car manufacturers worldwide, including Audi, Mercedes-Benz, and BMW. According to NikkeiAsia, the car tech patent licensing deals were finalized in the second half of 2022. As a result, licensed Huawei smart car technology will be used in 15 million of the 70 million cars produced each year globally.

In the face of US sanctions, Huawei is profiting from its patent and R&D capabilities and investing the profit back into research. The patent licensing agreements allow Huawei to deal with both domestic and global players for a better revenue option.

Along with Oppo, Huawei has reached a deal with Samsung to share critical technical patents. Huawei collaborated with 20 firms throughout the world, including smartphone manufacturers, smart car manufacturers, network equipment manufacturers, and others.

According to company data, Huawei filed a record 6952 patents last year. 3500 patent applications were lodged with the EU patent office alone. By the end of 2021, the tech company had over 110,000 active patents worldwide.