Huawei, Qualcomm sign multi-year patent deal covering 5G, AI and computing

Huawei and Qualcomm have reached a multi-year patent licensing agreement covering 5G, artificial intelligence, computing and networking, in a deal that brings two major technology patent holders together on a broader set of technologies despite years of US restrictions on Huawei.

The agreement includes cross-licensing of the companies' patent portfolios and Qualcomm's purchase of certain Huawei US patents covering computing, AI and networking, Huawei said on Monday. The transaction remains subject to the necessary regulatory approvals.

For Huawei, the agreement is particularly significant because it is the company's first patent licensing deal with Qualcomm to include 5G technologies.

Huawei said the agreement is expected to take the cumulative value of its patent licensing deals above $6.9 billion once the transaction closes.

Huawei and Qualcomm expand patent ties to 5G and AI

The new agreement covers intellectual property spanning several of the technology industry's most important areas, including 5G communications, artificial intelligence, computing and networking.

The arrangement is based on fair, reasonable and non-discriminatory, or FRAND, principles, which are widely used for licensing patents that are considered essential to industry standards.

The agreement also gives Qualcomm access to selected Huawei patents in the US. Those patents relate to computing, AI and networking technologies.

"Huawei's broad contributions to the 4G/5G standards, such as the near-physical-limit signal transmission technology using polar codes, have established Huawei's leadership in the mobile communications industry," Alan Fan, Huawei's chief intellectual property officer, said in a statement. "This agreement not only demonstrates the value of Huawei's innovations, but also recognizes Qualcomm's foundational contributions to modern communication technologies."

John Han, executive vice president and general manager of Qualcomm Technology Licensing, said the deal "reaffirms industry recognition of Qualcomm's 5G technology leadership" and reflects Qualcomm's recognition of Huawei's continued innovation in 5G and other fields.

Huawei's patent business grows despite US technology restrictions

The agreement comes after several years in which Huawei has faced restrictions on access to advanced foreign technology.

US export controls introduced in 2019 have limited Huawei's ability to obtain cutting-edge chips and key software. The restrictions have pushed the Chinese technology company to increase investment in research and development as it seeks to build more capabilities internally.

Its patent portfolio has consequently become an increasingly important part of the company's technology business.

Huawei said its intellectual property licensing business has remained profitable since 2021, reflecting the returns from years of research and development spending.

The company made its first licensing payment to Qualcomm in 2001. A decade later, in 2011, Huawei received its first licensing income, from Motorola, according to Reuters.

The Qualcomm agreement follows Huawei's patent licensing deal with HP announced in August, extending a series of agreements through which the Chinese company monetises its intellectual property.

What the Qualcomm deal means for Huawei's patent portfolio

Huawei has become one of the world's major contributors to telecommunications standards, particularly in 4G and 5G technology.

Patent licensing allows companies that develop technologies used in industry standards to earn royalties from other businesses that use those technologies. Cross-licensing agreements can also reduce disputes between technology companies by giving each side defined rights to use portions of the other's intellectual property.

The latest Qualcomm agreement combines both elements. It covers cross-licensing between the two companies while also involving Qualcomm's purchase of selected Huawei US patents.

Huawei expects the transaction to push the cumulative value of its patent licensing agreements beyond $6.9 billion after regulatory approvals and completion.

The agreement therefore adds another revenue stream to Huawei's technology business at a time when restrictions on access to advanced overseas technology have made domestic research and intellectual property increasingly important to the company.

The deal also underscores the breadth of the intellectual property held by both companies, spanning technologies that underpin smartphones, artificial intelligence, computing infrastructure and modern communications networks.