Huawei Reaches TechnologyLicensing Deal With Nokia Despite U.S. Restrictions
Hong Kong-Huawei Technologies Co. and Nokia Corp. 0.65% of NOKs have reached an agreement to license more smartphones and network technology among themselves, reflecting the concerns of Chinese companies moving technology beyond global networks despite US sanctions.
A patent licensing agreement announced Friday between the two companies extends a five-year technology-sharing agreement that expires this year. It comes just weeks after Huawei announced a 5G licensing deal with Chinese smartphone rival Oppo Mobile Telecommunication Corp.
The deal shows that Huawei's intellectual property remains on global networks despite US sanctions that effectively block its access to many Western markets.
Huawei is one of the world's largest wireless patent holders and a key player in the decades-long process of setting 5G wireless standards, ensuring that Western companies must license their technologies to build 5G networks and vice versa.
Previously, Huawei was one of the world's leading smartphone and network companies until US sanctions blocked the company's access to the latest chips.
Neither Huawei nor Nokia disclosed details about the financial terms or the licensed technology in their deal announced on Friday. Both companies are the main holders of so-called standard core patents, which cover the technologies needed to build wireless networks, or the equipment used to connect to them.
Such cross-licensing agreements are common in the industry and typically don't involve money changing hands, said Hoseok Li-Makiyama, director of the European Center for International Political Economy, a Brussels-based think tank. Instead, they open the way for companies to continue selling existing products without the threat of lawsuits, he added. "It's almost like a peace treaty: they agree not to sue each other," he said.
However, Huawei wants to use its vast intellectual property to boost revenue while other lines of business suffer. In 2022, the company said it expects to generate more revenue from licensing its technology than it has paid out to other companies for the second year in a row.
Earlier this month, Huawei said it had signed a cross-licensing agreement with Oppo covering mobile device patents. The company said it has signed or renewed more than 20 patent license agreements this year covering a variety of technologies, including smartphones, networking devices and automotive technology.
In the three years from 2019 to 2021, the company reported $1.3 billion in patent licensing revenue, a fraction of the nearly $99 billion in revenue generated last year. In 2021 alone, Nokia received 1.5 billion euros in patent licenses, equivalent to $1.6 billion.
Huawei's revenue fell 29% last year as US sanctions hit its smartphone business. Huawei's 5G telecommunications business has been blocked in some Western countries under pressure from the US, which considers Huawei equipment vulnerable to spying or interception by the Chinese government. Huawei has denied that its hardware poses a threat.
Email Dan Strumpf at Dan.Strumpf@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
"Huawei Renews License Agreement With Nokia Despite Restrictions", print edition December 24, 2022.
