A document posted to Qualcomm’s website appears to outline its planned royalty scheme for 5G devices. While the San-Diego based chipmaker does not seem to have made a formal announcement or issued a press release, the one-page “Qualcomm 5G NR Royalty Terms Statement” looks like it was uploaded to the company’s website on 19th November.
IAM has made the document available in full at this link.
The statement lays out a framework that it says will give makers of mobile handsets access to Qualcomm’s patented 5G New Radio (NR) inventions in a way that is consistent with the firm’s FRAND commitments. It presents the following rate structure:
Under Qualcomm’s licensing program for cellular essential patents, the following royalty terms will apply on a worldwide basis to a license for Original Equipment Manufacturer (OEM) branded mobile handsets that implement the 5G NR standard, up to and including release 15 of the 3GPP specifications:
- An effective running royalty rate of 2.275% of the selling price of branded single-mode 5G handsets; and
- An effective running royalty rate of 3.25% of the selling price of branded multi-mode (3G/4G/5G) handsets.
While it states these rates will apply on a “worldwide basis”, the next part of the document indicates that it may be intended primarily for a Chinese audience. Qualcomm did not release any press statement in English or Chinese about the 5G rate structure, and the document seems to have surfaced first on Chinese-language blogs and social media. This suggests it may have been shared with the country’s industry players already. It continues:
The terms described herein are generally consistent with over 150 cellular essentials-only license agreements Qualcomm has signed for China since 2015 for 3G/4G branded handsets, except that Qualcomm will in future negotiations offer to include the later releases of 4G and the first 5G release without increasing the royalty rates currently applicable under such agreements.
In addition, Qualcomm will continue to offer licenses for OEM branded mobile handsets that include both Qualcomm’s cellular standard essential patents as well as those patents not essential to the standard, a total portfolio of over 130,000 patents and pending applications worldwide at royalty rates of 4% of the selling price for branded single-mode handsets and 5% of the selling price for branded multi-mode handsets.
While Qualcomm has indeed been able to agree to licence terms with most Chinese mobile players in the aftermath of its 2015 settlement with the NDRC, it has also told investors that a major OEM in China has discontinued royalty payments. Amid rumours that more Android OEMs will follow suit, perhaps the publishing of 5G rights now is an effort to keep important partners in China onside.
Ericsson became the first major SEP owner to publish its 5G rates back in March, when chief IP officer Gustav Brismark revealed that royalties would begin at $2.50 for low-end handsets and top out at $5.00 for top-of-the-line models. Qualcomm’s statement gives us a second data point. Notably both announcements apply specifically to mobile handsets, meaning the fee structure for other Internet of Things-related applications is still up in the air.
The other thing to note is that Broadcom’s takeover attempt is currently looming over Qualcomm and most observers agree that if it goes through it will have a huge impact on the licensing business. Analysts told Reuters this week they would expect a Broadcom management to either spin-off QTL (Qualcomm’s licensing arm), move to a flat royalty structure or cease licensing altogether and instead raise chip prices using patents as leverage. Now we know the shape Qualcomm’s own management sees its licensing programme taking in the 5G era, which it expects will begin in earnest around 2019. We will see whether this rate structure survives until then.
Jacob Schindler contributed reporting