Qualcomm to pay Huawei for patent rights in historic reversal of licensing ties

Multi-year cross-licensing agreement covers 5G and AI patents; Qualcomm will also purchase some of Huawei's US patents outright.

By LineZotpaper
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Qualcomm will pay Huawei for patent rights for the first time under a broad cross-licensing agreement announced this week, marking a turnaround from a two-decade relationship in which Huawei had always been the licensee. The deal covers 5G, AI, compute and networking patents, and includes Qualcomm's purchase of select Huawei US patents, subject to regulatory approval.

Qualcomm and Huawei have announced a multi-year patent license agreement that reverses the longstanding financial flow between the two companies. Under the deal, Qualcomm will pay Huawei for rights to its patent portfolio, a first since Huawei began licensing Qualcomm's technology in 2001. The agreement, described as a "broad patent license agreement," also includes the outright sale of some of Huawei's US patents to Qualcomm, covering compute, AI, networking and other technologies. The number and value of the patents were not disclosed.

The announcement reflects Huawei's growing patent strength. The company says its total patent licensing revenue, counting from its first such income from Motorola in 2011, will exceed USD 6.9 billion with the Qualcomm deal. Since 2021, Huawei's licensing business has generated more revenue than the company pays out to other patent holders. As of 2025, Huawei held 165,000 active granted patents worldwide.

The relationship between the two firms has been shaped by US sanctions. Qualcomm previously supplied chips for some Huawei phones, but the US government revoked Qualcomm's license to sell certain hardware to Huawei in 2024. Huawei's royalty payments to Qualcomm stopped in 2018, and a back royalty dispute was settled in 2020. Huawei later halted Qualcomm royalty recognition in its revenue by early 2025.

Under the new agreement, both companies commit to licensing on fair, reasonable and non-discriminatory (FRAND) principles. The deal involves no other business cooperation, meaning no chip sales are included. The patent purchase requires regulatory approval before closing. Qualcomm also recently renewed its patent license with Apple, effective April 1, 2027.

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Analysis

Why This Matters

  • The deal marks a significant shift in the patent power balance between a US chip giant and a Chinese telecommunications equipment leader.
  • It underscores Huawei's success in building a valuable patent portfolio despite US sanctions, potentially influencing future licensing negotiations with other firms.
  • US regulators will scrutinize the transfer of Huawei's US patents to Qualcomm, with implications for technology transfer and national security.

Background

For 25 years, Huawei paid Qualcomm for access to its CDMA and later cellular patents. That relationship changed as Huawei invested heavily in R&D, building a portfolio of over 165,000 patents. US sanctions limited Qualcomm's ability to sell hardware to Huawei, and royalty payments dried up. Huawei has also pursued litigation to enforce its patents, including a 2024 lawsuit against MediaTek. The new agreement effectively levels a playing field that once heavily favored Qualcomm.

Key Perspectives

Qualcomm: Gains access to Huawei's extensive 5G and AI patent portfolio, securing its own freedom to operate. However, it is now a net payer to Huawei, a first in their relationship. Huawei: Achieves recognition and financial return from its patent investments, bolstering its licensing business and validating its technology leadership. Critics/Skeptics: Some may question whether the patent purchase could facilitate the transfer of sensitive technology to a US company, or whether the deal is a workaround to sanctions. Regulatory approval is not guaranteed.

What to Watch

  • Whether US regulators approve the patent purchase and on what timeline.
  • Qualcomm's fiscal fourth-quarter report (due next month) will not reflect this deal, but future quarters may show the financial impact.
  • Further cross-licensing deals by Huawei with other major technology companies, following its recent Wi-Fi patent agreement with HP.

Sources

Zotpaper

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