Patents can be a very profitable revenue source, allowing a company to benefit from a long-term investment in research and development.
Huawei announced recently it will charge up to $2.50 in royalties for each smartphone using network patents that it controls. While this is lower than other more-established players in the area, it still reflects positively on the company’s R&D.
The company isn’t alone in profiting from their patents, with other large tech providers such as Ericsson able to receive royalties to up to $5 per device, and Qualcomm which has topped out at $7.50 in the past. With many millions of smartphones sold per year, each company earns a significant portion of its revenue from these royalties.
Huawei’s collection of patent royalties for their advancements with new 5G technology could become a lucrative supplement to smartphone manufacturing. Their patents already brought in over $1.2 billion between 2019 and 2021, and they seem intent on growing that number further.
Though the company won’t be netting as much as its competitors, they have said they will use the royalties that do come in to reinvest in research and development to stay competitive against the likes of Ericsson and Nokia.