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Huawei crackdown

Huawei licenses 4G tech for '30m Volkswagen cars'

Chinese tech company pushes to monetize its wireless tech amid US crackdown

Huawei is looking to turn its trove of wireless technology into a new revenue stream by licensing patents to automakers and suppliers.      © Reuters

TAIPEI -- Huawei Technologies said on Wednesday its wireless technology will be used in 30 million Volkswagen cars after the Chinese company inked a licensing deal with a supplier to the world's largest carmaker.

The deal represents the embattled tech company's latest effort to survive an ongoing U.S. clampdown and monetize its 4G and 5G wireless technologies. These technologies, which include communication protocols for smartphones and connected cars, are essential for such features as smart door locks, in-car infotainment systems, precise positioning, and advanced driver-assistance systems.

Huawei, China's largest holder of standard essential patents (SEPs) for 4G and 5G communications technology, said it will be able to find customers for its patent portfolio in the auto industry, an area that the company has focused on since Washington's trade restrictions disrupted its vital chip and component supplies. Huawei said earlier this year that it expected to receive more than $1 billion in patent licensing fees from global companies for the three years through 2021.

The company said the deal is its biggest ever licensing agreement in the automotive sector, but did not give a monetary value or the name of the Volkswagen supplier.

Volkswagen told Nikkei Asia that it "welcome[s] that a leading ICT company has granted one of our suppliers a license to standard-essential mobile communications patents. This licensing in the supply chain is a model of how the increasingly close cooperation between the mobility industry and the information and communications industry can succeed."

Huawei has entered into more than 100 patent license agreements with major companies across Europe, the U.S., Japan and South Korea in the past 20 years.

The latest licensing deal with the Volkswagen supplier will not only help the Chinese tech giant monetize its technological prowess, it will also deepen its engagement with the rising EV industry. Huawei is already collaborating with Chinese EV maker Arcfox, a unit of state-backed automaker BAIC Group, to introduce EVs equipped with its connectivity technology.

Huawei, the world's biggest telecom equipment maker, is seeking new areas of growth to counter the setbacks to its 5G equipment business brought on by U.S. pressure. Washington has implemented a series of trade restrictions on the company over alleged national security risks and has discouraged allies from allowing the company's gear into their communications infrastructure. Huawei's market share for smartphones -- once one of its flagship businesses -- has also plunged due to the U.S. crackdown, hitting just 4% in the first quarter of 2021 from 18% a year ago.

"Compared with the U.S., Europe is an easier entry point for Huawei to keep increasing its presence in automotive electronics," said Chiu Shih-fang, a veteran tech supply chain analyst with the Taiwan Institute for Economic Research. "Volkswagen has been very aggressive in developing smart vehicles, and Huawei could be a good partner to collaborate with, given the Chinese company's strong capability in wireless communication technologies."

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