What’s up with… Intel, Euro telcos, Ribbon and Cisco

  • Federal funding kickstarts Intel’s $100bn US investment cycle
  • Europe’s telcos put more pressure on the EC
  • Ribbon and Cisco boast optical interop breakthrough

In today’s industry news roundup: With Chips and Science Act funding on its way, plus other federal fiscal incentives, Intel is ploughing ahead with its $100bn US investment programme; the GSMA and its European operator members bang the new deal/fair share drum (again); Ribbon and Cisco have achieved 1.2Tbit/s optical interoperability in a move that one analyst says is an “exciting development”; and much more!

Following confirmation of up to $8.5bn in funding through the US Chips and Science Act plus tax credits and federal loans of up to $11bn, Intel is pressing ahead with its plans to “invest more than $100bn in the US over five years to expand US chipmaking capacity and capabilities critical to economic and national security and acceleration of emerging technologies, such as AI,” the chip giant noted in this announcement. The funding will “help advance Intel’s critical semiconductor manufacturing and research and development projects at sites in Arizona, New Mexico, Ohio and Oregon – US locations where the company produces some of the world’s most advanced chips and semiconductor packaging technologies,” noted the vendor. “Today is a defining moment for the US and Intel as we work to power the next great chapter of American semiconductor innovation,” blustered Intel CEO Pat Gelsinger. “AI is supercharging the digital revolution and everything digital needs semiconductors. Chips Act support will help to ensure that Intel and the US stay at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future,” he added. The company noted that its strategy has three core elements, namely “establishing process technology leadership, building a more resilient and sustainable global semiconductor supply chain, and creating a world-class foundry business – all of which align with the objectives of the Chips Act to promote semiconductor manufacturing and technology leadership in the US.” This is good news for Intel and the US economy as, according to the chip vendor, its investment plan is to “create more than 10,000 company jobs and nearly 20,000 construction jobs, and to support more than 50,000 indirect jobs with suppliers and supporting industries.” The announcement, which gave Intel’s share price a slight lift of 1% to $42.48 for a market valuation of almost $180bn, comes at a time when the technology supply chain has been through the worst of its post-Covid challenges but now faces pressures to deliver against the growing demand for compute and storage capabilities fuelled by the increasing use of AI applications, in particular generative AI. And AI, of course, is not only “supercharging the digital revolution” but is also supercharging the revenues and business momentum of Intel rival Nvidia, which is currently beating its chest at its own GTC 2024 event in San Jose, California, and leveraging its massive AI technology leadership. Nvidia, it should be noted, does not have its own chip-making facilities, but what it does have is a massive leadership in the market for the graphics processing units (GPUs) needed for GenAI workloads and a market valuation of $2.2tn.  

The coordinated campaign by Europe’s telcos (and their supporting industry organisations) to put pressure on regional lawmakers continued today with the publication of Connecting Europe to 2030: A Mobile Industry Manifesto for Europe by the GSMA and “leading” mobile operators from the region. The manifesto calls for “critical policy reforms to ensure that Europe’s digital economy, underpinned by strong, sustained network innovation, can reestablish a leadership position in the global tech race by 2030” and help advance the European Union’s digital agenda. However, achieving the region’s aims “requires addressing systemic challenges, including market fragmentation, regulatory hurdles, and investment barriers, which have stifled the European telecom sector’s growth and competitiveness,” according to the manifesto’s authors. This might all sound quite familiar as it is essentially the same ‘new deal’ narrative hammered home only weeks ago by four of the most powerful telco CEOs in Europe during a keynote session at MWC24 in Barcelona. And without using the term ‘fair share’, the manifesto reiterated the call by many in Europe’s operator community for the “large traffic generators” (the big tech firms) to “resume responsibility and contribute to infrastructure costs, thereby also incentivising optimised network usage that ensures better energy savings and prevents consumers from being exposed to unnecessary and unwanted data.” Whether that will, or even can, happen is a moot point, but what seems to be a more realistic goal is pressing for revised spectrum licensing rules and policies. As the manifesto noted: “The very high auction costs for mobile spectrum in Europe are consistently taking away funds from the sector that could be used for investment. Mobile operators have paid a total of €66bn in licence fees between 2000 and 2019 in Germany alone. European Commissioner for Internal Markets Thierry Breton has rightfully referred to spectrum as a ‘cash cow’ for member states. The review of EU spectrum policy is an opportunity to deliver wider adoption of best practices. Rules based on these principles will help achieve a more harmonised approach to licensing, encourage more ambitious investment outcomes across the union and deliver the far-reaching goals of the Digital Decade to the ultimate benefit of EU citizens and businesses.” That’s much harder to argue against… 

Telefónica’s CEO, José María Álvarez-Pallete, reiterated a call for reshaped regulatory landscape across Europe, so that the region combats “the clear asymmetry” with respect to other regions. In a keynote speech to commemorate the centenary of the telco group, Álvarez-Pallete emphasised an importance for Europe to embrace new rules to ensure “the responsible use of networks, data sovereignty and European competitiveness”. Europe needs to be moved forward in AI, security and defence, “with communications as the backbone”, he said. Telefónica’s executive also reiterated the need for Europe to have “a robust and sustainable telecommunications sector”. “We need the European institutions to enable it. We need a proper definition of the relevant markets and in-market scale. We need a new approach to regulation,” he stated in his speech in the capital of the European Union, Brussels, which was attended by representatives from the bloc. This appeal is far from new – other major European operators, including Vodafone, have also been repeatedly pushing for updated telco regulation.

News from the OFC conference in San Diego, California, where the optical networking community gathers each year. Ribbon Communications and Cisco have “achieved interoperability of 1.2Tbit/s optical transmission” using the Ribbon Apollo 9408 and the Cisco NCS 1014, which both incorporate Acacia Communications’ CIM 8 140Gbaud transceiver that “conforms to the OpenROADM bookended model for transponder interoperability”. (Acacia, you might recall, is now part of the Cisco family following a $4.5bn acquisition in 2021). Sam Bucci, Ribbon’s chief operating officer, is upbeat about the demo: “We’re launching a new era with this demonstration and showcasing a proven interoperable multivendor ecosystem for high-performance optical transmission that is a new direction from what has previously been the industry’s focus. We’re proud to collaborate with Cisco on this critical update, giving operators the confidence to access and deliver 1.2Tbit/s transmission speeds without resorting to a single closed solution.” OK, but is this such a big deal? Apparently so, according to Kyle Hollasch, lead analyst for transport hardware at Cignal AI, a research house that really knows its optical onions. “This demo marks an exciting development in the high-performance coherent space. Interoperability is a rarity in optical networking, and typically relies upon lowest-common-denominator technology. Network operators will derive tremendous value from the ability to open up their networks to multiple vendors while simultaneously delivering superior performance.” Read more

Users of 5G in India are, on average, consuming 3.6 times as much data as those on 4G connections in the country, according to the findings of Nokia’s Mobile Broadband Index. The widespread rollout of 5G networks and launch of 5G services across the vast country by Bharti Airtel and Reliance Jio since late 2022 contributed towards a 24% increase in the average data traffic per user figure to 24.1 Gbytes per month. Read more

Chinese smartphone and IoT device manufacturer Xiaomi has reported a slight dip in annual revenues for 2023 but much improved profitability. The company reported full year revenues of almost 271bn Chinese yuan (CYN) ($37.7bn), down by 3.2% year on year, but an operating profit of CYN20bn ($2.78bn), up by 610%! The vendor shipped 145.6 million smartphones last year, retaining its position as the third-largest smartphone vendor in the world. That figure was down from 150.5 million in 2022 but, as has been widely reported, 2023 was a year of decline in the smartphone market, so that dip was slight compared with other vendors. Read more.    

- The staff, TelecomTV

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