Huawei Technologies Co Ltd would start charging Apple Inc (NASDAQ: AAPL) with a reasonable fee for access to its trove of wireless 5G patents, unleashing a new revenue stream via its competitive moat, Bloomberg reports.
What Happened: Huawei would negotiate rates and potential cross-licensing with Apple and Samsung Electronics Co Ltd (OTC: SSNLF). The company remained focused on monetization despite the U.S. blacklisting with a promise to charge lower rates than rivals like Qualcomm Inc (NASDAQ: QCOM), Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC), and Nokia Oyj (NYSE: NOK).
Bloomberg notes that Huawei can earn between $1.2 billion to $1.3 billion in patent and licensing fees between 2019 and 2021. The company’s capping per-phone royalties of $2.5 could pose a potential threat to Qualcomm.
Apple rebuked Qualcomm’s unfair $7.50 royalty from every iPhone, which was justified by the latter in the name of technology.
Why It Matters: On Tuesday, Huawei dispelled concerns over American sanctions impacting its ability to cross-license with U.S. companies following the global availability. The company planned to divert the patent fees into research and development to maintain moat in wireless networking versus Ericsson and Nokia.
China’s largest technology company by revenue continued to fight for market share amidst the rapidly evolving field of connected cars, smart homes, and robotic surgery while dealing with the U.S. protectionism crippling its smartphone business and threatening to restrict its global networking.
Global regulators and courts continue to devise patent valuation methods for essential technology, including owner’s limits to the use of those creations.
The patent disputes are likely to intensify as sales of devices using 5G are estimated to grow to $668 billion globally in 2026 from just $5.5 billion in 2020.
Price action: AAPL shares are trading higher by 1.53% at $125.89 on the last check Tuesday.
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