Software maker Microsoft is selling about 1,500 of its patents to Chinese device maker Xiaomi.
This is a rare departure for the US company and is part of what the two companies say is the start of a long-term partnership.
The deal also includes a patent cross-licensing arrangement and a commitment by Xiaomi to install copies of Microsoft software, including Office and Skype, on its phones and tablets.
Both companies declined to discuss financial terms of the deal.
"This is a very big collaboration agreement between the two companies," said Wang Xiang, senior vice president at Xiaomi.
Analysts said Xiaomi's ambitions to be a major player outside China were hampered by weak patent protection and a fear of a prolonged legal battle.
Shipments of Xiaomi phones fell 9% year-on-year in China in the first quarter.
Its market share also dipped to 12% from 13%, squeezed not only by Huawei and Samsung Electronics but also smaller contenders including Oppo and Vivo.
Wang said the acquisition of Microsoft patents, which included voice communications, multimedia and cloud computing, on top of some 3,700 patents the Chinese company filed last year, were "an important step forwards to support our expansion internationally."
launched its first US device earlier this month, a TV set-top box it developed in cooperation with Alphabet's Google, which owns the Android operating system it and most Xiaomi devices run on.
Xiaomi has also launched a tablet which runs a version of Microsoft's Windows operating system.
Jonathan Tinter, corporate vice president at Microsoft, said the company was keen to tap into Xiaomi's young, affluent and educated users by having its products pre-installed on their devices.
He declined to go into detail about the patent deals, but said the overall deal was something "we do only with a few strategic partners."
Microsoft has cut licensing deals with many Android device makers over the years, but has had less luck with Chinese manufacturers.
