Huawei signs first 5G patent licensing deal with Qualcomm

Huawei Technologies said on Monday it had signed a broad, multi-year patent licence agreement with Qualcomm ↗ 0.13%. The deal covers 5G, computing, artificial intelligence and networking, and includes Qualcomm buying some of Huawei's U.S. patents.reuters+1

It is the first licensing deal between the two companies that covers 5G technology. It also reverses the usual direction of their relationship. More than two decades ago Huawei was paying the U.S. chip designer for access to its technology. Now Qualcomm is licensing, and buying, inventions from the Chinese company.reuters

Terms of the deal

In a joint announcement from Shenzhen, the companies said the agreement gives each side a licence to the other's patents across several technology fields. Qualcomm will also buy certain Huawei U.S. patents in compute, AI, networking and other areas. The deal will close once the necessary regulatory approvals are received, the companies said. They also said it reflects their commitment to licensing on fair, reasonable and non-discriminatory (FRAND) terms.huawei

The companies did not disclose financial terms, Dow Jones reported. Huawei said this is the first agreement under which it licenses and transfers patents in compute, AI and networking to Qualcomm. It said the deal will lift the expected value of its patent licensing contracts to more than $6.9 billion once completed.morningstar+1

The intellectual property news site ip fray reported that the required approval is likely a U.S. antitrust review under the Hart-Scott-Rodino Act. That review applies to patent purchases worth more than $133.9 million. The site estimated that the patents Qualcomm is buying make up about 0.23% of Huawei's global portfolio of roughly 296,000 active patents and applications, or about 681 patents.ipfray

From licensee to licensor

Huawei made its first licensing payment to Qualcomm in 2001. It received its first licensing income in 2011, from Motorola. Reuters reported that the company says its intellectual property licensing business has brought in positive revenue since 2021, after years of heavy spending on research and development.morningstar+1

That spending increased after U.S. trade restrictions, in place since 2019, limited Huawei's ability to buy advanced chips and key software. The restrictions cost Qualcomm a major customer for its smartphone processors. Even so, the two companies have kept licensing ties going through several agreements over the years.reuters+1

The Qualcomm agreement follows a licensing deal with HP Inc. ↗ 0.83% that Huawei announced in August. Technology analyst Anshel Sag summed up the new deal in a post on X:reuters

> "Qualcomm IS buying some Huawei US patents AND cross-licensing patents with Huawei."x