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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 percent market share for smartphones on the African continent and is rapidly expanding into the global south, is facing increasing legal and commercial pressure from major US and European technology companies.
Qualcomm earlier this week filed a lawsuit against Transsion, the manufacturer behind the Tecno, Itel and Infinix brands, in India and has filed claims in Europe and China alleging patent infringement. Philips has also sued Transsion in India, according to court documents.
According to insiders, Finnish telecom company Nokia is also pressuring the Chinese company to start making payments for patented technologies used in Transsion phones.
Ann Chaplin, general counsel for Qualcomm, told the Financial Times on Friday: “Transition […] has refused to accept a license from Qualcomm for most of its mobile products, so we are filing a lawsuit to enforce our rights.”
“Qualcomm has sued Transsion [ . . . ] to protect our patent rights and help restore a level playing field for all of our licensees,” Chaplin added.
Mobile phones are packed with components and technologies that have been developed and patented by multiple companies. Smartphone makers are required to pay royalties to the owners of each piece of intellectual property. If such royalties are not paid, smartphone makers can face legal action.
Transsion has followed an extremely low-cost business model to gain market share by undercutting rivals. The average Transsion smartphone sells for $110-120, according to Counterpoint, a research firm.
According to one analyst, the value of royalty agreements between major smartphone manufacturers and intellectual property holders is typically in the hundreds of millions of US dollars.
A Transsion spokesperson said the company “respects the intellectual property rights of third parties” and added that the company is willing to enter into an IP licensing agreement with patent holders through “friendly negotiations”.
“We have signed a 5G standard patent license 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, Chinese tech giant Huawei took legal action against Transsion in China in 2019, also alleging violations of intellectual property rights.
Transsion said in a statement that in some countries “some patent holders do not own patents – or only a small number – but [they] “charging high licensing fees based on a uniform worldwide 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 lawsuits that charge different rates in different regions.”
While the company has also become the best-selling brand in key growth markets such as Bangladesh, Pakistan and the Philippines, analysts say Transsion is now entering more affluent consumer segments with stricter patent enforcement regimes.
The same goes for sales of phones in parts of Europe, including Hungary and Poland, and in the Middle East, where a remarkable 194 percent growth was achieved year-on-year in the first quarter of 2024, according to the latest annual figures from research agency Canalys.
Additional reporting by Eleanor Olcott