Huawei Technologies announced that its wireless technology would be used in 30 million Volkswagen vehicles as part of a licensing agreement with the world’s largest automaker.
The agreement represents the embattled tech company’s latest attempt to survive and monetize its 4G and 5G wireless technologies in the face of an ongoing US crackdown. These technologies, including smartphone and connected car communication protocols, are required for features such as smart door locks, in-car infotainment systems, precise positioning, and advanced driver-assistance systems.
Huawei, China’s largest holder of standard-essential patents (SEPs) for 4G and 5G communications technology, said it would be able to find customers for its patent portfolio in the auto industry, an area that the company has prioritized since Washington’s trade restrictions disrupted vital chip and component supplies. Earlier this year, Huawei stated that it expected to receive more than $1 billion in patent licensing fees from global companies over the next three years, through 2021.
The company stated that this is its largest licensing agreement in the automotive industry, but it did not specify the monetary value or the name of the Volkswagen supplier.
In the last two decades, Huawei has signed more than 100 patent license agreements with major corporations in Europe, the United States, Japan, and South Korea.
“Compared with the U.S., Europe is an easier entry point for Huawei to keep increasing its presence in automotive electronics, Volkswagen has been very aggressive in developing smart vehicles, and Huawei could be a good partner to collaborate with, given the Chinese company’s strong capability in wireless communication technologies.”Chiu Shih-fang, supply chain analyst with the Taiwan Institute for Economic Research.
The latest licensing agreement with Volkswagen’s supplier will help the Chinese tech behemoth monetize its technological prowess and deepen its engagement with the burgeoning EV industry. Huawei is already collaborating with Chinese EV manufacturer Arcfox, a state-backed automaker BAIC Group subsidiary, to introduce EVs that use its connectivity technology.
Huawei, the world’s largest telecom equipment manufacturer, is looking for new growth areas to compensate for setbacks in its 5G equipment business caused by US pressure. Washington has imposed a slew of trade restrictions on the company due to alleged national security risks. It has discouraged allies from incorporating the company’s equipment into their communications networks. Huawei’s market share for smartphones, which was once one of its flagship businesses, has also fallen due to the US crackdown, reaching just 4% in the first quarter of 2021, down from 18% a year ago.