Huawei Technologies, the Chinese telecommunication giant, is charging patent fees to about 30 small and medium-sized Japanese companies for the use of its wireless communication technology, according to Nikkei Asia. This move indicates Huawei’s growing reliance on patent royalties as a source of income amid U.S. sanctions.

A source at Huawei’s Japan unit said that "talks are currently underway with about 30 Japanese telecom-related companies." The company is also believed to be stepping up its royalty collection in Southeast Asia.

Huawei holds a high share of so-called standard-essential patents that are crucial to using such wireless communications standards as 4G or Wi-Fi. Many internet-connected devices made by other companies use Huawei’s patented technology and have to pay licensing fees if Huawei demands it.

The requested payment levels range from a fixed fee of 50 yen (35 cents) or less per unit to 0.1% or less of the price of the system. “The level is on par with international standards,” said Toshifumi Futamata, a visiting researcher at the University of Tokyo.

Huawei has previously announced a Wi-Fi 6 patent licensing agreement with Japan’s Buffalo, which allows Buffalo’s Wi-Fi devices to use Huawei’s Wi-Fi 6 standard-essential patents. Huawei is one of the three largest contributors to the Wi-Fi 6 technology standard, along with Qualcomm and Intel.

Huawei’s business environment has become increasingly difficult as U.S. sanctions stemming from data security concerns have made it hard to sell products overseas. Without access to Google’s Android, for example, it has struggled to sell devices overseas. Patent royalties are not subject to trade restrictions and could be a stable source of income for Huawei.

However, many small and medium-sized Japanese companies are unfamiliar with patent negotiations and may face unexpected expenses or data leaks if they sign unfavorable contracts with Huawei. Futamata warned that "they need to enlist lawyers and other experts for help to avoid signing disadvantageous contracts."