Qualcomm to buy Huawei U.S. patents in broad licensing deal

The multi-year cross-license covers 5G, compute, AI and networking and needs regulatory approval to close; Huawei says it pushes the value of its licensing deals past $6.9 billion.

A white and blue-glass Qualcomm office building with the company logo near the roofline, behind a row of trees.

Photo: Coolcaesar at en.wikipedia, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0), via Wikimedia Commons (source)

Qualcomm and Huawei Technologies have signed a multi-year patent license agreement that includes Qualcomm buying some of the Chinese company's U.S. patents, the two companies said in a joint announcement on Monday, Oct. 5.

The deal grants each side licenses to the other's patent portfolio in fields including 5G, compute, AI and networking. The patents Qualcomm is acquiring cover compute, AI, networking and other technologies, according to the announcement. The companies said the transaction will close once they receive "the necessary regulatory approvals." They did not disclose financial terms or name the regulators involved.

A reversal in the payment flow

The agreement is Huawei's first patent license with Qualcomm that covers 5G, Reuters reported, citing a Huawei statement. Once the deal is done, Huawei expects the combined value of all its patent-licensing contracts to exceed $6.9 billion, according to Reuters.

Nikkei Asia reported that the arrangement, if approved, would make Qualcomm the net payer to Huawei for the first time, and that it will set off a regulatory review in the United States. Huawei first paid Qualcomm for a license in 2001; its own first licensing revenue came a decade later, in 2011, from Motorola, Reuters said.

Each company used the announcement to credit its own research. "This agreement reaffirms industry recognition of Qualcomm's 5G technology leadership and the success of Qualcomm's 5G SEP licensing program," said John Han, who runs Qualcomm Technology Licensing as an executive vice president. Alan Fan, Huawei's chief intellectual property officer, said the deal "not only demonstrates the value of Huawei's innovations, but also recognizes Qualcomm's foundational contributions to modern communication technologies."

The companies said the agreement is consistent with fair, reasonable and non-discriminatory (FRAND) licensing principles.

Context

Huawei has operated under U.S. trade restrictions since 2019 that have limited its access to advanced chips and key software, and it has raised research spending in response, Reuters reported. Huawei said its licensing business has brought in positive revenue since 2021. The Qualcomm pact follows a licensing deal Huawei announced with HP Inc. in August, according to Reuters.

Washington has also restricted the chips U.S. firms can sell to Huawei. The U.S. government revoked some export licenses that had allowed Intel and Qualcomm to supply Huawei with certain semiconductors two years ago, DatacenterDynamics reported. In 2020, Qualcomm had won U.S. permission to ship older 4G chips to Huawei, DCD said.

What's next

The patent purchase cannot close until the required approvals are granted. Neither company gave a timeline, and no U.S. agency had commented publicly on the deal in the reports reviewed for this article.

Sources

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