- 5G smartphone modem market not deemed a profitable option
- Other 5G modem applications beckon
- Expects a proliferation of 5G devices and connectivity use cases
Intel says it’s planning to exit the 5G smartphone modem business but will assess the opportunities available in 4G and 5G modems for other product categories requiring 5G connectivity such as PCs and IoT devices.
The Intel announcement appears to coincide almost exactly with the news that Apple and Qualcomm had dropped their lawsuits against each other and that they had signed a six year licensing deal and a “multiyear chipset supply agreement” (see - Qualcomm and Apple Agree to Drop All Litigation). That appears to mean that Apple, still a very large player on the global smartphone stage, is no longer a potential customer for Intel 5G modem chips.
There is a tiny bit of wriggle-room in the Intel announcement if you over-interpret the exact wording of the press release, though. Intel says it will continue to meet current customer commitments for its existing 4G smartphone modem product line, but 'does not expect' to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020.”
So it could plausibly say its expectations have changed at some point in the future without attracting too many boos and catcalls.
The Intel announcement has been greeted with surprise and even some shock by the industry. Consolidation and shakeouts amongst 5G technology providers were always expected (this is just the way things roll in high growth tech markets), but only once a proper commoditization process with winners and losers had occurred, not before broad network rollout and device sales were even under way!
In fact the 5G device market appears to be maturing much more quickly than previous ‘G’s. Not so long ago many observers were confidently expecting the usual period of wheel-spin at the advent of a new ‘G’, when handsets are delayed or arrive with faults and snafus. The sage advice was to hold off buying for as long as feasible so you didn’t buy a lemon.
That may still be good advice with 5G of course, but at this moment it doesn’t feel that way. Fantastically powerful chipsets mean that most of a smartphone’s DNA gets embedded and tested well before an OEM has a chance to introduce faults. Fingers crossed.
Where does Intel go from here?
Plenty of places if we’re to believe half of the 5G hype. Intel appears to have pulled out of smartphone modems after calculating there simply wasn’t any room for it in a market dominated by Qualcomm and other already entrenched players, especially with Apple disappointingly snuggling up with Qualcomm after years at daggers drawn.
5G smartphone modems are different from non-smartphone modems (you can’t just biff in any old modem and hope nobody notices) because they make specific technical demands, the most important of which is probably power consumption. Smartphones have small batteries (smaller all the time) and so their chips are optimised to use as little power as possible.
When it comes to other types of connected device, however, Intel, with its roots in PCs, has a much better chance. A tethered PC has plenty of power on-hand and the same applies to laptops with their comparatively large batteries.
Intel also mentions IoT where a wide range of devices will make yet another set of demands. So if all goes according to the 5G plan, then we’re talking pervasive connectivity with plenty of non smartphone devices that Intel could target.
It claims it’s excited at the prospect
“We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” said Intel CEO Bob Swan. “5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property. We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.”
Intel expects to provide additional details in its upcoming first-quarter 2019 earnings call, scheduled for April 25.
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