Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shenzhen-listed Transsion, the world’s fourth-largest smartphone maker, is being sued by Qualcomm and Philips for alleged intellectual property violations.
Transsion, which has a 48 per cent market share for smartphones in the African continent and is rapidly expanding across the global south, is facing intensifying legal and commercial pressures from large US and European technology companies.
Qualcomm filed a lawsuit against Transsion, the manufacturer behind the Tecno, Itel and Infinix brands, in India earlier this week and has filed claims in Europe and China over alleged patent infringement. Philips has also sued Transsion in India, according to court filings.
Nokia, the Finnish telecoms company, is also pressuring the Chinese company to start making payments for patented technologies used in Transsion phones, according to people familiar with the matter.
Ann Chaplin, Qualcomm’s general counsel, told the Financial Times on Friday: “Transsion […] has declined to accept a licence from Qualcomm for the majority of its mobile products, so we are pursuing litigation to enforce our rights”.
“Qualcomm has sued Transsion [ . . . ] to protect our patent rights and help restore a level playing field for all our licensees,” Chaplin added.
Mobile phones are full of components and technologies that were developed and patented by multiple companies. Smartphone makers are obliged to pay royalties to the owners of each piece of intellectual property. When such royalties are not paid, smartphone makers can face legal action.
Transsion has followed an extremely low-cost business model to win market share by undercutting rivals. The average Transsion smartphone sells for $110-120, according to Counterpoint, a research firm.
Typically the value of royalties agreements by large smartphone makers to intellectual property owners is in the region of hundreds of millions of US dollars, according to one analyst.
A Transsion spokesperson said it “respects the intellectual property rights of third parties” and added that the company is willing to reach an IP licence agreement with patent holders through “friendly negotiations”.
“We have signed a 5G standard patent licence agreement with Qualcomm and are in the process of fulfilling that agreement,” the spokesperson added.
In January, Philips filed an IP lawsuit against Transsion in India, another country where Transsion is trying to gain a foothold, according to court documents. Philips declined to comment. Transsion declined to comment specifically on the Philips case.
According to Chinese media reports, the Chinese tech giant Huawei launched legal action against Transsion in China in 2019, also alleging IP violations.
Transsion said in a statement that in some countries “some patent holders do not own — or only own a small number of — patents, but [they] demand high licensing fees based on a global uniform rate, without taking into account factors such as differences in the level of economic development of different regions, their lack of patents in a particular region or market, or existing legal cases that offer different rates in different regions.”
While the company has also emerged as the top-selling brand in important growth markets such as Bangladesh, Pakistan and the Philippines, analysts say Transsion is now pushing into more affluent consumer segments with stronger patent enforcement regimes.
That includes selling phones in parts of Europe, including Hungary and Poland, as well as the Middle East, where it posted an eye-catching 194 per cent year-on-year growth in the first quarter of 2024, according to the latest year-on-year figures compiled by research firm Canalys.
Additional reporting by Eleanor Olcott
