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Huawei crackdown

Huawei shows off patent progress despite US pressure

China tech champion says it will bag over $1bn in licensing fees for 2019-21

Huawei leads the world in number of 5G standard essential patents, which are essential for implementing a new standardized technology.    © Reuters

TAIPEI -- Chinese tech champion Huawei on Tuesday said it will receive more than $1 billion in patent licensing fees from global companies for the three years through 2021 -- trying to assert that its technological prowess remains intact in the face of U.S. efforts to curb its growth and innovation.

Jason Ding, head of Huawei's intellectual property rights department, said the company, through its patents and research, has been the biggest contributor to setting global 5G standards.

"Revenue derived from patents is not a major revenue stream for Huawei, as it is not the company's main business model, but it is one of the sources for Huawei to keep investing in its R&D," Ding said at an event on Tuesday marking the release of the company's annual white paper on intellectual property.

Huawei started researching 5G connectivity technologies in 2009 and currently holds the largest number of 5G standard essential patents (SEPs), accounting for 18.3% of the global 5G patent families that have been granted and are active.

It is followed by Nokia's 14.6%, Samsung's 12.9% and LG's 11.2%, according to a joint report this month by consultancies Amplified and GreyB. The report looked specifically at SEPs. A report in February by IPlytics looking at overall 5G declared patents also put Huawei in the lead with a 15.39% share, followed by Qualcomm with 11.24% and ZTE with 9.81%. Samsung and Nokia, meanwhile, had 9.67% and 9.01%, respectively.

SEPs are indispensable when implementing a new standardized technology, and the numbers of such key patents is often viewed as an indicator of the holder's technological strength.

Huawei held more than 100,000 active patents in over 40,000 patent families worldwide as of the end of 2020, the company's white paper said. It estimates licensing fees for 2019 through 2021 will total between $1.2 billion and $1.3 billion.

In 2020 alone, Huawei continued to top the list of international patent applications, filing 5,464 applications, nearly twice as many as the second-largest filer, Samsung Electronics, which filed 3,093 applications, said Francis Gurry, former director-general of the World Intellectual Property Organization, said at the Huawei event on Tuesday.

WIPO earlier this month said China was the world's largest IP applicant for the second year in a row in 2020.

Previously, the U.S. had held the No. 1 position every year since the WIPO patent cooperation treaty system began in 1978.

China's patent applications grew more than 16% on the year amid the global pandemic, while U.S. patent applications grew 3%, WIPO's report said.

However, the Commission on the Theft of American Intellectual Property, a bipartisan initiative of U.S. leaders from the private and public sectors, claims China is the world's main IP infringer.

"We endorsed the previous administration's elevation of IP protection to a priority issue in its bilateral negotiations with China, but we believe the broad-based tariff approach has been ineffective in changing Chinese policy and the inherent structural barriers to better protection," IP Commission chair Admiral Dennis Blair said in a press statement on Tuesday. "A more effective strategy would be a targeted set of actions against the specific bad actors."

Washington has repeatedly accused China of misusing American intellectual property to facilitate its own tech advancement.

As the largest patent holder in China, Huawei has come under particularly intense scrutiny. In February 2020, the U.S. Justice Department pressed charges against the company for allegedly stealing IP from six American companies, including source code, user manuals for internet routers, robot-testing technology and antenna technology.

Washington has long flagged Huawei as a national security threat, citing its alleged links with the Chinese military and government, and has moved to cut off all non-licensed vital chip supplies to Huawei if their products involve any American technologies. Huawei has consistently denied the allegations.

China has made 5G technology deployment a priority of its new infrastructure initiative since early 2020, trying to use the rollout to drive the local economy amid the pandemic.

Beijing's 5G acceleration provided Huawei with significant support as the Chinese tech giant encountered headwinds in overseas markets due to Washington's crackdown.

Huawei's smartphone business lost nearly 3 percentage points in global market share in 2020, but its telecom equipment business, where the company's key technologies lies, remained global No. 1 with a 31% share, up from the 28% it held in 2019, thanks to Huawei gaining market share in China, according to research agency Dell'Oro Group.

The Chinese tech giant has sought technologies beyond smartphones and its other existing products as a means to survive in the longer term. Its research and development investments totaled 131.7 billion yuan ($20.26 billion) in 2019, the latest available number, accounting for 15.3% of its annual revenue -- up from 13.86% in 2018.

From 2010 to 2019, Huawei's total R&D investment exceeded 600 billion yuan. As of the end of 2020, Huawei had 105,000 R&D employees, or roughly 53.4% of the company's workforce. In 2018, around 80,000 of its employees were involved in R&D, according to its annual report.

"Research and innovation are Huawei's bread and butter. Moving forward, we will shift from technology and engineering-oriented innovation to focus more on driving breakthroughs in basic research and inventing new fundamental technologies," the company said in the white paper.

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