What is the meaning of Xiaomi's "purchase" of 332 US patents from INTEL

Today, when the iPhone occupies half of the Chinese mobile phone market, Xiaomi, as a leader among domestic brands, has been committed to improving its own brand. Some time ago, Xiaomi purchased 332 U.S. patents from intel. Although the acquisition did not disclose the price, it is roughly estimated that it is basically based on semiconductor technology (there are a small number of communication technology and software-related patents). According to the data given by PVQ, as of the third quarter of 2015, the average price of a U.S. patent (average paid per patent) was 170000 U.S. dollars (see the figure below).

Assuming that Xiaomi's patents acquired from Intel are also at a similar price, the estimated total purchase price is about $56.44 million.

Of course, considering Intel's hunger for the Chinese chip market (mainly by Qualcomm and ARM), especially its emphasis on the mobile device chip market, 56.44 million US dollars may be discounted. After all, Intel's various goodwill to Xiaomi has long been known to all. As early as the end of last year, the US media exposed that Intel did not hesitate to praise the upcoming Xiaomi notebook, but also provided the so-called "special terms (special deal)", which stipulates that every time Xiaomi buys a notebook chip from Intel, intel gave Xiaomi an Atom chip (a mobile device processor that can be used in mobile phones and notebooks). This buy-one-get-one-free behavior, as well as the $1.5 billion stake in China's Tsinghua Ziguang Group in 2014, all show Intel's determination to make a big difference in China's chip market.

What is the value of the patents acquired?

By searching the Patentics database, we can find that Xiaomi has acquired 365 US patents so far. Among them, 2 were acquired from Datang Telecom in December 2014 and 31 were acquired from Broadcom in October 2015. Of the 332 patents acquired this time, 315 were patents submitted and authorized by Intel itself, and some were bought by Intel from LSI and Skyworks Solution and resold to Xiaomi.

From the perspective of technology distribution, the patented technology of Xiaomi's acquisition is widely distributed, involving storage management, control logic, sequence coding, etc., covering the fields of communication, electronic devices and software technology.

In terms of patent protection period, most of the patents purchased by Xiaomi from Intel were filed between 2000 and 2002, and the patents that have been granted now, if these patents are invention patents, the average protection period is only about 5.9 years, and the validity period is not long.

The 332 patents are just a drop in the bucket for Intel, which has tens of thousands of patents, and Intel has used the patent deal to further optimize its patent assets. Judging from the average citation frequency of patents, the citation frequency of patents owned by Intel is higher than that of patents sold to Xiaomi, reflecting to some extent that Intel still has reservations about selling high-quality patents.

Weak patent reserves

Since its establishment, Xiaomi has been actively applying for patents. By 2015, Xiaomi has applied for 6000 patents, and plans to apply for 4000 patents this year, increasing the number of patent applications to 10000. However, communication patents need to accumulate, and they cannot obtain enough patents to protect themselves by applying for them alone. Less than half a year after entering the Indian market in 2014, Xiaomi's hot sales of mobile phones suffered a severe setback due to infringement of Ericsson's patent rights, and its market share declined. Ericsson's patent infringement lawsuit in the Indian market includes GSM patent. GSM was founded in 1982. Facing the experience of the Indian market, Xiaomi is more cautious in entering the United States.

In 2015, millet began to sell mobile phone accessories in the United States. An important reason for its delay in selling mobile phones, tablets and other main products in the United States is the lack of patent protection.

Although Xiaomi has previously submitted some patent applications, it was not until 2013 that it began its patent layout in the United States. The search results show that as of February 26, 2016, Xiaomi has only 9 patent applications in the United States. Such a weak patent reserve, Xiaomi in the patent "dense" smartphone industry, in the face of the United States non patent implementation entity (NPE) frequently waved patent litigation "big stick", it is not enough.

It is for this reason that Xiaomi has accelerated the pace of patent acquisition and is eager to get rid of the dilemma of being subject to others. In order to quickly have their own intellectual property reserves, millet "Hao purchase" the behavior of the United States patent can be understood.