Will 'Technology Thief' Stigma Be Lifted?… Chinese Huawei Pays Qualcomm Technology Royalties

$1.8 Billion in Technology Royalties for Q3
Technology Royalty Decision Interpreted as a Reconciliation Gesture from the Chinese Side

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese telecommunications equipment company Huawei has agreed to pay technology royalties to the U.S. company Qualcomm. Western countries, including the U.S., have pressured Huawei by banning the use of its equipment. Attention is focused on whether this will be an opportunity for Huawei to shed the stigma of being a technology thief amid U.S.-China tensions.

According to CNBC and others on the 29th (local time), Huawei will start paying technology royalties to Qualcomm from the third quarter. The amount of royalties will reach $1.8 billion (approximately 2.1492 trillion KRW) in this quarter alone.

Huawei was placed on the U.S. trade restriction blacklist in May last year and is the number one target Chinese company for Western countries including the U.S. Therefore, the significance of this royalty payment agreement cannot be ignored. While Western countries such as the U.S., Canada, the U.K., and France have used bans on Huawei products as a card to pressure China, Huawei’s decision to pay a fair price for technology use is notable.

Huawei’s decision to pay Qualcomm technology royalties is being interpreted as a gesture of reconciliation from the Chinese side. It is analyzed that this decision considered the possibility of prolonged conflicts with the U.S. through lengthy legal battles, and that paying royalties to the American company Qualcomm could help save face for the Trump administration. Qualcomm previously signed a patent agreement with Apple through litigation.

There are also expectations that the U.S. will partially ease sanctions on Huawei. A foreign media outlet recently reported, citing sources, that "the U.S. government will revise the 'Huawei ban' to allow American companies to cooperate with Huawei in building next-generation network international standards." This means that U.S. IT companies will no longer need government approval to participate in international technology standard organizations led by Huawei. Although the stronger intention is to avoid losing leadership in setting the 5th generation (5G) international standards, this is also seen as a step back from the hardline stance against Huawei.

The French government recently announced a policy to phase out Huawei by not renewing licenses for Huawei 5G telecommunications equipment. However, considering that the license renewal period extends until 2028, this is interpreted as giving the Chinese government some time.

Following the news of Huawei’s royalty payment, Qualcomm’s stock price surged 11.61% in after-hours trading.