On the desk today · InterDigital
No phones. No chips. No factories. Just 32,000 patents — and a royalty on every device that uses them.
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The Royalty Embedded
In The Standard Itself
In 1972 — a year before anyone had even made a cell phone call — a stock market investor named Sherwin Seligsohn founded a company in Philadelphia called International Mobile Machines Corporation. His idea was ahead of its time by a decade. He wanted to build a portable digital radio system. The technology didn't exist yet. Neither did the market. But Seligsohn hired engineers and told them to start inventing.
They did. Over the next 50 years, those engineers — and their successors — invented fundamental wireless technologies that became part of global standards. From 2G to 3G to 4G to 5G to Wi-Fi. The inventions were patented. The patents were contributed to the standards that govern how every phone, tablet, and connected device communicates. And today, every manufacturer that builds a device using those standards pays a royalty.
I made a video call last week. My phone connected to a cell tower using 5G. The signal traveled to a data center. The video was compressed using codecs that made the stream small enough to flow in real time. I didn't think about how any of that worked. But buried in the standards that made it possible — the code that tells every 5G chip how to transmit data, every codec how to compress video — are patents owned by a company in Wilmington, Delaware, with roughly 430 employees.
That company is InterDigital. You have never heard of it. Every phone you have ever owned has paid it.
Most people think patent licensing is a legal sideshow — trolls suing companies over vague claims. InterDigital is the opposite. It is a research and development company that employs scientists and engineers who invent wireless and video technology, contribute that technology to global standards bodies, and then license the resulting patents to every manufacturer that uses the standard. The patents are essential — meaning you cannot build a 5G-compliant device without them. The licensing terms are governed by FRAND rules — fair, reasonable, and non-discriminatory. But the fees are mandatory. If you ship a phone that uses 5G, you pay InterDigital.
The company holds more than 32,000 patents and applications worldwide — including over 13,000 related to 5G alone. Over 90% were developed internally. In fiscal 2025, InterDigital reported $834 million in revenue — a record — with a 55.3% operating margin. Net income was $406.6 million. That is a 48.8% net profit margin from approximately 430 people. Nearly $2 million in revenue per employee. The company has no factories. No products. No sales force calling on consumers. It collects royalties — and reinvests roughly half of its recurring revenue back into research that produces the next generation of patents.
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That 55.3% operating margin tells you what happens when your product is an idea. InterDigital doesn't manufacture anything. It doesn't ship anything. It doesn't maintain anything. It invents, patents, and licenses. The cost structure is research — engineers and scientists — and legal — the teams that negotiate and enforce the licenses. Once a patent is granted and embedded in a global standard, the revenue from that patent flows for years with almost no incremental cost. The marginal cost of licensing one more manufacturer is close to zero.
Here is the deal that makes the model visible. In July 2025, an international arbitration panel determined the royalties for InterDigital's patent license with Samsung Electronics. The total: $1.05 billion over eight years — from 2023 through 2030. That single contract generates approximately $131 million per year in recurring revenue, a 67% increase from the previous Samsung agreement. One licensee. One contract. A billion dollars. And Samsung is just one of more than a dozen active licensees — alongside Apple, vivo, Honor, HP, and others.
Liren Chen, InterDigital's president and CEO, said it plainly in the fiscal 2025 earnings release: "Through the year we accelerated momentum across our licensing programs, including a record performance in smartphones; we significantly deepened our AI expertise and industry leadership in our research teams; and we drove double-digit growth in our patent portfolio to help us deliver long-term value for shareholders."
The flywheel runs on the standards themselves. Every generation of wireless technology — 3G, 4G, 5G, and now the early work on 6G — requires new patents. InterDigital has contributed more than 5,000 technical submissions to global standards bodies for 5G, 6G, and video codecs. Each contribution that gets adopted into the standard creates a new patent that every device maker must license. The patent portfolio grows. The standards grow. The number of connected devices grows. And every new device — every phone, every tablet, every car with a wireless connection, every IoT sensor — pays the toll.
WHY THIS WORKS
Standard essential patents are mandatory. If your technology is adopted into a global standard like 5G, every device that uses the standard must license it. There is no workaround. The standard is the moat.
55% operating margin from 430 people. No factories, no supply chains, no inventory. The cost is research. The revenue is royalties. The margin expands with every new license signed.
Samsung alone pays $1 billion over eight years. One contract, one customer, $131 million per year. InterDigital licenses to seven of the top ten smartphone vendors — each one a separate revenue stream.
The patent portfolio compounds with each generation. 32,000 patents today. 13,000 for 5G. As 6G development accelerates, InterDigital's engineers are already inventing the next wave — and the royalties from the next standard are already being written.
InterDigital was founded in 1972 — a year before anyone had even made a cell phone call. Sherwin Seligsohn started a company to build wireless technology that didn't have a market yet. Fifty-four years later, there are more than 5 billion smartphone users on earth. Every one of their devices uses technology that traces back to patents held by a company with 430 employees in Wilmington, Delaware. InterDigital has secured more than $3.6 billion in contract value since 2021 alone. It does not make a single product. It does not sell a single device. It collects — quietly, automatically, from every manufacturer that ships a phone — because the ideas its engineers invented became the rules the whole industry follows.
