Nokia has added Chinese phone maker Huawei to the roster of companies that will be paying the Finnish communications and consumer electronics firm a license fee for its inventory of patents. The two tech giants have inked a patent license agreement that will allow Huawei to use some of Nokia’s patented technologies for its smartphones over the coming years, though financial terms of the deal were not disclosed. The deal is expected to help boost Nokia’s licensing business that's been becoming increasingly important for its operations in recent times.
For the three-month period ending September 30, Nokia's licensing operations gained $570 million in revenue, which represented a 37 percent increase compared to the same period a year ago, with $212 million of that amount generated by the company’s patent settlement with LG Electronics. Also, Nokia’s licensing business is supposed to be the major contributor to the company’s performance over the next couple of years until its 5G deployment efforts begin to pay off, with the Nokia Technologies division expected to achieve further growth moving forward amid robust sales of HMD Global’s Nokia-branded smartphones. Nokia Technologies is, of course, the Espoo, Finland-based company’s unit responsible for its catalog of patented smartphone technologies including battery saving features, radio reception-boosting tools, and methods for minimizing hardware component requirements.
As a result of Nokia’s growing licensing operations, the company has been striking patent license agreements with several major players in the smartphone market including Apple, from which Nokia received €1.7 billion in license fees last July. The amount of the license fee was revealed upon the release of Nokia’s second quarter results for this year. Also in July, it was reported that Nokia and Xiaomi signed a multi-year patent agreement that included a cross-license to their respective cellular standards and other patents. Additionally, Nokia’s President and CEO Rajeev Suri also disclosed at that time that the company would be working with Xiaomi on a wide range of strategic projects in which Nokia would provide network infrastructure equipment to the Chinese phone maker. Considering the recent successes of Nokia’s licensing business, it's likely that the company will be focusing more heavily on this segment over the next few years.