Huawei Bites Back
Huawei (pvt) has been the recipient of all of the political muscle that the US has to bear, taking the company from the market-leading global; supplier to much of the world, a shell of its former self. Whether justified or not, the pressure that has been placed on the company has limited its ability to compete in the global market as a telecom supplier, as a smartphone manufacturer, and as a developer of new product technology. The company’s founder has tried to downplay the effects of the stringent trade bans placed on the company, which were based on the assumption that the country rules that Chinese companies have to allow the government access to data when the ‘national security’ of the country is under siege. This produced the assumption that Huawei has put ‘backdoors’ in its equipment, allowing it to monitor the calls of US and other allies.
The damage to Huawei has been significant, and the company is no longer a global smartphone producer and faces the replacement of much of its equipment in the US telecom infrastructure, but one thing it does have is IP that it developed during its hay-day as the largest producer of mobile devices. We noted on 9/24 that the company’s founder and CEO, Ren Zhengfei, indicated that he is moving the company toward a new direction, one that is better suited to the coming decade of weak consumer demand that he foresees. We noted that Huawei is China’s largest privately owned patent holder, and as such has the ability to utilize those patents as a way to generate income, with many being basic telecom patents for mobile devices. In the past Huawei has been lax about enforcing many of those patents, but that philosophy seems to be at an end, despite earlier statements to the contrary, as the company is pushed deeper into the trade abyss.
Huawei recently filed a lawsuit against Amazon and Compal (2324.TT) In the People’s Court of Jiangsu Province, and while neither the plaintiff or the defendants have commented on the filing, it is expected it has to do with tablet IP owned by Huawei. With the company owning more than 45,000 patent families and ranks #5 as to patents authorized by the US patent office, and generating between $1.2b and $1.3b in IP revenue during 2019 and 2021, they have the ability to leverage that IP further. While the CEO has answered the question about ‘weaponizing’ the company’s vast IP by stating “We are too busy, we are developing too fast, and we have no time to collect patent fees…”, it would seem that they now have the free time needed to go after those fees.
The damage to Huawei has been significant, and the company is no longer a global smartphone producer and faces the replacement of much of its equipment in the US telecom infrastructure, but one thing it does have is IP that it developed during its hay-day as the largest producer of mobile devices. We noted on 9/24 that the company’s founder and CEO, Ren Zhengfei, indicated that he is moving the company toward a new direction, one that is better suited to the coming decade of weak consumer demand that he foresees. We noted that Huawei is China’s largest privately owned patent holder, and as such has the ability to utilize those patents as a way to generate income, with many being basic telecom patents for mobile devices. In the past Huawei has been lax about enforcing many of those patents, but that philosophy seems to be at an end, despite earlier statements to the contrary, as the company is pushed deeper into the trade abyss.
Huawei recently filed a lawsuit against Amazon and Compal (2324.TT) In the People’s Court of Jiangsu Province, and while neither the plaintiff or the defendants have commented on the filing, it is expected it has to do with tablet IP owned by Huawei. With the company owning more than 45,000 patent families and ranks #5 as to patents authorized by the US patent office, and generating between $1.2b and $1.3b in IP revenue during 2019 and 2021, they have the ability to leverage that IP further. While the CEO has answered the question about ‘weaponizing’ the company’s vast IP by stating “We are too busy, we are developing too fast, and we have no time to collect patent fees…”, it would seem that they now have the free time needed to go after those fees.
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