Nokia and Xiaomi signed a multi-year cross-licensing patent agreement on Wednesday that would allow both companies to "explore opportunities" in areas such as the Internet of Things, augmented and virtual reality, and artificial intelligence. The deal also includes a cross license to each company's cellular standard essential patents.

The partnership will also mean that both Nokia and Xiaomi will work together on optical transport solutions for datacenter interconnect, IP Routing based on Nokia's newly announced FP4 network processor, and a data center fabric solution.

"Xiaomi is one of the world's leading smartphone manufacturers and we are delighted to have reached an agreement with them. 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," said Rajeev Suri, President & CEO of Nokia.

"As a company seeking to deliver more exciting technological innovations to the world, we are excited at the opportunity to work more closely with Nokia in future. Xiaomi is committed to building sustainable, long-term partnerships with global technology leaders. 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, as we seek to create even more remarkable products and services that deliver the best user experience to our Mi fans worldwide," said Lei Jun, chairman and CEO of Xiaomi.