Huawei files patent suit against Mediatek

(SOURCE: IMAGO/ALAMY STOCK PHOTO)

Huawei alleges IP infringement as it files a patent suit against Mediatek, having reportedly failed to reach agreement on licensing fees.

Huawei has filed a patent suit in a Beijing court against Taiwan handset chip firm Mediatek.

The suit, alleging infringement of Huawei’s IP, appears to be the latest move in a deadlocked negotiation between the two sides over licensing fees charged by Huawei.

Financial news site yicai.com reported that the companies had been in talks up to two or three years ago, but discussions had broken down because Mediatek had been unwilling to accept Huawei’s charges.

Huawei demanded a fee based on the price of the user terminal, but MediaTek believed that the price was too high, an unnamed source told the paper.

The case has prompted speculation in Chinese media that Huawei is trying to extend the patent licensing model beyond device manufacturers to the chip segment, led by players such as Qualcomm, Mediatek and Huawei’s Hi-Silicon.

Driving licensing fees down to the component level might reduce price pressure on handset OEMs and ultimately reduce handset price tags.

It certainly seems to depart from Huawei’s own public statements. When the company unveiled its patent licensing fee program 12 months ago, it made no mention of chip players and identified just three licensee categories – handsets, Wi-Fi, and IoT.

Chasing licensing deals

Huawei is one of the mobile industry’s largest patent holders and by most measures owns the biggest number of standard-essential 3GPP 5G patents.

It doesn’t formally disclose its licensing income but it revealed last year that royalty fees totaled $560 million in 2022.

At the end of 2023 the company had signed 140,000 global patents, with around 200 licensing and cross-licensing agreements.

Since the US sanctions tightened around Huawei, which previously had spurned licensing fees, the company has become quite aggressive in striking licensing and cross-licensing agreements.

In the past 19 months it has agreed to licensing deals with companies such as domestic handset brands Vivo and Xiaomi and global tech players Amazon, Ericsson and Nokia.

Mediatek overtook Qualcomm in the 5G smartphone market in Q1, with shipments of Mediatek-powered devices up 53% year-over-year, growing its market share to 29.1%. Qualcomm’s share fell nearly five points to 26.5%.

It focuses on the mid to low-end tier smartphones and has built a strong client base of Chinese smartphone OEMs such as Transsion and Xiaomi.

Mediatek confirmed the Huawei suit in a filing to the Taipei Stock Exchange, but said the company would not comment while the case was being litigated.

It said the lawsuit would have no material impact.

Mediatek’s stock fell 1.6% on the Taipei exchange Friday.

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