Hytera's eight-year cross-border litigation has been resolved, with massive compensation payments continuously eroding its performance, and three consecutive years of losses forcing the company to undergo transformation.

(Image source: Visual China)

Blue Whale News, March 13th (Reporter Shao Yuting) — On the evening of March 12th, Hytera Communications (002583.SZ) announced a major development in its litigation case, revealing that the U.S. Illinois Federal District Court issued a final ruling regarding the company’s criminal trade secret case brought by the U.S. Department of Justice (DOJ). This long-running, eight-year cross-border legal battle, which has attracted global attention, has officially come to an end.

According to the announcement, Hytera is required to pay a $50 million fine to the U.S. government and settle with Motorola Solutions and its Malaysian subsidiary for $0. The related payments are to be made after the civil judgment for the trade secret copyright case is fulfilled and no later than the end of 2029.

As the first criminal prosecution in U.S. history against a Chinese tech company for trade secrets, this outcome not only provides temporary relief from the ongoing criminal litigation pressure on Hytera but also opens a new chapter for the company to shed legal shackles and focus on core business development.

However, the financial damage caused by the eight-year litigation has already permeated all aspects of the company’s operations. Continuous losses and cash flow pressures remain significant challenges. How the final judgment will impact the company’s future financial statements and whether the increased focus on R&D and compliance upgrades driven by litigation can help the company recover and explore new paths are key concerns for the market and investors.

Eight-year litigation concludes with a $50 million fine, better than expected

Hytera’s legal dispute with Motorola originated from competition in the global private network communication industry, centered on the ownership of trade secrets and copyrights related to Digital Mobile Radio (DMR) technology.

Public information shows that Hytera was founded in 1993 and has grown into a core player in the global private network communication field, relying on rapid domestic market growth. The company specializes in professional wireless communication equipment and emergency communication solutions, earning the industry nickname “Little Huawei,” directly competing with Motorola.

Starting in 2006, Hytera began recruiting former Motorola employees. This behavior was accused of obtaining Motorola’s DMR trade secrets and copyright codes through departing engineers, with the technology being applied to Hytera’s core products. In 2017, Motorola filed a civil lawsuit in the Northern District of Illinois, accusing Hytera of trade secret infringement, and in the following year, added copyright infringement claims.

The civil lawsuit experienced ups and downs. In 2020, a U.S. Illinois federal jury found Hytera guilty of trade secret and copyright infringement, ordering the company to pay Motorola $764 million in damages, setting a new high for intellectual property litigation damages involving Chinese companies in the U.S.

Faced with such a large compensation, Hytera appealed repeatedly, and the damages were adjusted accordingly. In January 2025, Hytera reached a plea agreement with the U.S. Department of Justice. According to the plea deal, Hytera would pay a fine ranging from $0 to $60 million and compensate Motorola accordingly.

On March 5, 2026, the U.S. Illinois Northern District Federal Court issued a final criminal verdict, determining that Hytera must pay a $50 million fine to the U.S. government. The court also rejected Motorola’s claim for $290.3 million in criminal-related damages, ruling that the company owed $0 in damages.

This ruling marked a significant turning point in Hytera’s litigation process. Compared to the previous market expectation of a $60 million cap, the court’s decision reduced the potential payout by $10 million. More importantly, it eliminated any additional criminal damages, preventing further cash flow drain and greatly easing the company’s financial pressure.

According to Hytera’s announcement, the company had fully provisioned the maximum amount of $60 million in its 2024 annual report based on the previous agreement with the U.S. Department of Justice. The additional $10 million provision was reversed in accordance with accounting standards. The court also clarified that the fine must be paid no later than the end of 2029, giving Hytera ample time to prepare funds and avoiding a short-term cash flow shock.

On March 13th, when asked about the verdict, Hytera’s Secretary Office staff stated that due to internal confidentiality, they could not disclose further details. The company’s operations are normal, and the adjustment in compensation will not affect its 2025 earnings forecast.

Regarding whether the company agrees with the verdict or plans to pursue further legal action, the staff said they have not received any notice of appeal so far. Any future developments will be announced promptly. The company also noted that the current ruling is a first-instance decision, and the final outcome remains uncertain.

Since Motorola initiated the trade secret lawsuit in 2017, Hytera’s stock price has fluctuated significantly. After a sharp decline following a global sales ban issued by a U.S. court in April 2024, the stock fell from 4.71 yuan per share to 3.37 yuan, with market value shrinking from 7.7 billion yuan to 6.1 billion yuan within half a month. It then stabilized at a low level. As the litigation was gradually resolved, the stock recovered and stabilized around 12 yuan in 2025.

As of March 13th, Hytera’s closing price was 11.12 yuan per share, up 1.37%, with a total market value of 20.22 billion yuan.

Litigation impacts performance, with three consecutive years of losses pushing the company toward transformation

The ongoing litigation has continued to impact Hytera’s operational performance, with large compensation payments and provisions being the main reasons for losses.

By January 2026, Hytera had paid a total of $258 million in civil damages to Motorola in three installments: $60.94 million transferred from a joint escrow account in 2024, $157 million paid in 2025, and another $40 million in January 2026. These ongoing payments have continued to erode cash flow and profits.

On January 31, 2026, Hytera released its 2025 earnings forecast, estimating a net loss attributable to shareholders of 190 million to 290 million yuan, while excluding non-recurring gains and losses, net profit showed year-over-year growth. Notably, this marks the third consecutive year of losses, following losses of 388 million yuan in 2023 and 3.485 billion yuan in 2024.

The company explained that the direct cause of the net loss was the provision of approximately $110 million for the first-instance ruling on licensing fees for its H series DMR products. Excluding this factor, net profit showed significant growth.

Hytera also stated that its core operations remained positive in 2025. Thanks to optimized debt structure, lower financing costs, and increased foreign exchange gains, its financial expenses in the first three quarters improved significantly compared to the previous year, and legal expenses decreased notably.

From an operational perspective, although U.S. market business was somewhat restricted due to litigation, the company actively expanded into emerging markets in Europe, Asia-Pacific, and Latin America. The financial report shows that in the first half of 2025, overseas sales accounted for 51.23%, surpassing domestic sales. Hytera stated it will continue to develop international markets.

Additionally, the company has been upgrading R&D and compliance efforts, promoting technological iteration and product innovation to reduce reliance on the litigated DMR products.

Notably, Hytera has launched several product lines for individual consumers, small and medium-sized businesses, and civilian groups, including the BP560, BP510 series walkie-talkies, PD600, PD660 digital business radios, establishing online and offline sales channels. The flagship stores on JD.com and Tmall feature products priced from hundreds to thousands of yuan.

Currently, the company’s consumer-oriented products constitute a small proportion of sales, with no separate financial disclosures. On Hytera’s Tmall flagship store, the best-selling product is the TC500S outdoor mini walkie-talkie priced at 599 yuan, with over 3,000 units sold nationwide. A customer service representative recommended the S1 series walkie-talkie priced at 329 yuan, noting it is popular with over 2,000 units sold. Other products have sales around 400 to 600 units, such as the PD700EX professional digital explosion-proof walkie-talkie starting at 4,000 yuan, with only five units sold.

Hytera staff also stated that consumer business remains an important supplement to the overall business. The company’s main focus continues to be on specialized communication, with narrowband digital private network products and integrated public-private solutions serving sectors like public safety, government emergency response, utilities, and industrial and commercial fields, providing emergency communication, command dispatch, and daily operational communication solutions.