Ericsson Expects $1bn In IP Revenue After Huawei Deal

Ericsson's headquarters in Sweden. Ericsson

Ericsson says expects $1bn in IP licensing revenues this year after renewing cross-licensing deal with sanctioned Chinese firm Huawei

Swedish telecoms equipment maker Ericsson has said it expects to report 11 billion Swedish crowns ($1bn, £800m) in intellectual property licensing income following the renewal of a patent cross-licensing agreement with Shenzhen, China-based Huawei.

The companies renewed a multi-year deal under which the firms pay one another royalties for the use of the other’s patents in technologies such as smartphones and 5G base stations.

“With the current portfolio of IPR licensing contracts, Ericsson estimates the full-year 2023 IPR licensing revenues to be approximately 11 billion crowns,” the firm said in a statement.

Huawei said the cross-licensing agreement announced on Friday would cover patents essential for 3G, 4G and 5G worldwide, adding that the deal was long-term without giving a specific time frame.

Huawei CeBIT 2017 ericsson

Patent deal

“As major contributors of standard essential patents (SEPs) for mobile communication, the companies recognise the value of each other’s intellectual property, and this agreement creates a stronger patent environment,” said Huawei intellectual property department head Alan Fan.

“This agreement is the result of intensive discussions that ensured the interests of both patent holders and implementers are served fairly.”

Ericsson chief intellectual property officer Christina Petersson said the deal demonstrates the firms’ commitment “that intellectual property should be respected and rewarded, and that leading technological innovations should be shared across the industry”.

In previous years Huawei paid more in licensing rights than it was paid, due to a prominent position in smartphone sales in China and elsewhere.

US sanctions

After the US placed the company on the national security Entity List in 2019 those sales plunged, and Huawei brought in more from royalties than it spent for the first time in 2021.

Huawei said it received about $560m from patent royalties last year.

The company has recently faced increased pressure in the European Union as countries such as Spain, Sweden and Germany bring in restrictions affecting it and other Chinese firms.