Chinese smartphone maker Xiaomi and Finnish network equipment supplier Nokia said Wednesday they have signed a deal to allow them to use each other's patents, as both companies try to stay relevant in the rapidly-evolving mobile communications game.
The deal could be an important breakthrough for Xiaomi, which has struggled to build on an initial phase of explosive growth in its home market that once made it the world's most valuable startup. Having briefly been the biggest-selling smartphone brand in China, it slumped to fifth place in 2016 according to figures from IDC and conspicuously failed to publish its own annual sales figures.
Ben Wood, an analyst with connected device consultants CCS Insight, tweeted that that the deal was "a much needed milestone for @Xiaomi if it is serious about international expansion."
Outside China, Xiaomi's expansion has been restricted by its relative paucity of intellectual property. Its expansion into India stalled temporarily in 2014 after being challenged in the country's patent courts by Sweden's Ericsson. Nokia's patents could help its suite of connected and mobile devices overcome that problem.
According to a joint statement, the two companies will license standard essential patents (those that make it possible for new products to conform to existing industry standards) to each other.
"Xiaomi is committed to building sustainable, long-term partnerships with global technology leaders," Xiaomi's chairman and CEO Lei Jun said in the statement. "Our collaboration with Nokia will enable us to tap on its leadership in building large, high-performance networks and formidable strength in software and services."
Nokia CEO Rajeev Suri said he was "delighted" to have sealed the agreement with "one of the world's leading smartphone manufacturers."
"In addition to welcoming such a prominent global technology company to our family of patent licensees, we look forward to working together on a wide range of strategic projects," Suri said. Nokia's shares rose nearly 2% in response to the new in morning trading in Europe Wednesday.