Huawei revealed the royalty rate for its 5G handset technology for the first time, as it stepped up efforts to increase transparency around its patent cost structure and highlighted R&D progress.

In a briefing, Jason Ding, head of Huawei’s IP Department (pictured), announced it will provide “a reasonable percentage royalty rate” for each multi-mode 5G smartphone using its technology, capped at $2.50 per device.

He claimed the company was the largest technical contributor to 5G standards, and follows fair, reasonable and non-discriminatory (FRAND) principles when it comes to patent licensing.

“We hope 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.”

By the close of this year, Ding said Huawei estimates revenue from patent licensing will stand at between $1.2 billion to 1.3 billion since the start of 2019.

Balanced approach
When considering pricing IP, he said companies need to weigh two factors: “The price must provide a return on investment while making the cost of implementation by the industry reasonable.”

“We take a balanced position between the two elements. We may be the top creator of patents, but that doesn’t mean we charge the highest rates.”

Based on data from the World Intellectual Property Organisation, Huawei said it was the largest filer of international patent applications in 2020, with 5,464 compared with the 3,093 from second-placed Samsung.

At end-2020, Huawei employed 105,000 R&D staff, roughly 53.4 per cent of its workforce.

In 2019, R&D investments totalled CNY131.7 billion ($20.3 billion), 15.3 per cent of annual revenue: it is due to release 2020 figures later this month.