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Qualcomm to Add 5G Modems to More Affordable SoCs

Qualcomm, the world’s top mobile chip designer, plans to expand its 5G cellular modems to more affordable apps processors, in an effort to make 5G smartphones available at cheaper prices. The move could help connect billions of consumers to 5G networks, which offer far faster data transfers and lower latency than 4G LTE technology today.

Qualcomm is already selling discrete modem chips to Samsung and other customers for early 5G smartphones, which are priced at a premium. These phones tend to take advantage of Qualcomm’s Snapdragon 8 Series SoCs, which are usually used in the highest-end handsets. Samsung uses Qualcomm’s Snapdragon 855 SoC in its flagship Galaxy S10 5G, which costs $1,300 compared to $900 for the 4G model.

Qualcomm plans to integrate its 5G modems in its mid-range Snapdragon 6 Series and 7 Series SoCs, which are staples in 4G smartphones that sell for $200 to $400. That could curb the high cost of most 5G smartphones on the market. The new Snapdragon 7 Series should be added to 5G devices by the first quarter of 2020, while the 5G Snapdragon Series 6 processor will start shipping in products by the second half of 2020, Qualcomm said.

Alex Katouzian, Qualcomm's senior vice president and general manager for mobile, said that adding 5G to its more affordable chips would speed the global rollout of 5G technology. The San Diego, California-based company said 2.2 billion users could upgrade to 5G gadgets using the cheaper chips. More than 10 smartphone makers plan to use the Snapdragon 7 Series SoCs, including LG Electronics, Motorola and Chinese OEMs Vivo and Oppo.

“5G network rollouts are progressing much faster when compared to 4G," said Steve Mollenkopf, Qualcomm’s chief executive officer, on an analyst conference call in July. He said that more than 20 operators are currently rolling out 5G networks globally and more than 20 smartphone makers are developing 5G devices. He added that all 5G coverage in China would be roughly equal to the scale of a major U.S wireless operator by the end of 2019.

Qualcomm is trying to hold onto its lead in 5G technology, which it hopes will breathe new life into the stagnating handset space. Qualcomm, which controls close to 50% market share in cellular baseband chips, is the primary provider of 5G modems for the first 5G smartphones rolled out by Xiaomi, LG Electronics, ZTE and others. More than 150 designs are in development with its X50 and X55 modems as well as its 5G SoCs, Qualcomm said.

But other modem chip designers are getting set to challenge Qualcomm's dominance in 5G. Trying to expand its footprint in premium phones, Mediatek in May introduced an integrated multimode 5G SoC that supports 2.5 Gbps upload and 4.7 Gbps download speeds in the sub-6 GHz and 2.5 GHz frequency bands. Mediatek’s SoC uses TSMC’s advanced 7-nanometer node. It is expected to enter mass production in the first quarter of 2020. 

Huawei is shipping its first discrete multimode 5G modem, the Balong 5000, in some of its phones. China’s leading smartphone vendor also plans to start adding an integrated 5G SoC to its high-end handsets by the end of the year. The chipset, produced on the 7-nanometer node and designed by Huawei’s semiconductor subsidiary HiSilicon, can handle up to 1.25 Gbps upload speeds and 2.3 Gbps download speeds in the sub-6 GHz frequencies.

Huawei, which has been hurting Qualcomm with its massive market share gains in China, plans to use the integrated 5G SoC in its flagship handset, the Mate 30. But the smartphone may not be able to launch with access to Google’s Android operating system or any of Google’s popular apps due to U.S. sanctions slapped on the Chinese telecom equipment maker in May. That could severely hamper sales of the new smartphone.

Huawei is the world’s second largest phone seller behind Samsung, which has also developed its own 5G modem chips for some of its premium smartphones in South Korea and other markets. It plans to start producing its new Exynos SoC with integrated sub-6 GHz 5G before the end of 2019. China's Unisoc is also building 5G modems to tap demand from local companies looking to distance themselves from Qualcomm amid the U.S. trade war.

But Qualcomm holds a key advantage over other players in the $21.5 billion modem chip market, analysts say. The company’s chips can cover the full range of frequency bands used by 5G, including sub-6 GHz bands favored in Europe and China for early 5G deployments. They can also handle millimeter waves, which have a shorter range than sub-6 GHz bands and can even be deflected by your hand holding your smartphone but higher capacity.

That means the company’s 5G chips can connect to any cellular network in any part of the world where its customers sell devices. The chips from Samsung, Mediatek and Huawei can only operate in the sub-6 GHz bands tapped in most of the 5G networks in Europe, South Korea and China. But they cannot fully take advantage of 5G millimeter wave networks that are the primary focus of American operators including AT&T and Verizon.

Qualcomm is supplying its first generation modem chipset, the X50, to customers using it in premium phones. But the X50 modem is a standalone part that can only access 5G networks. That means it needs to be connected to a separate chipset such as the Snapdragon 855 processor to run over older 2G, 3G and 4G networks. But using an additional modem adds to the bulkiness, cost and power consumption of the smartphone, analysts say.

The company’s second-generation modem, the X55, can access 2G, 3G, 4G and 5G networks using a single discrete device that can handle a global range of frequencies, including the 26GHz, 28GHz and 39GHz bands, and support up to 7 Gbps downloads. Qualcomm plans to add the 5G multimode baseband chip to a new Snapdragon Series 8 processor in 2020. That could lead to smaller and cheaper devices that burn through less power.

Qualcomm is betting 5G will turn things around in the smartphone market, which has stagnated as consumers take longer than ever to upgrade to new models. The company says it can make 50% more money per 5G phone, in part because of how much more complex 5G modems are. Modem chips that can only handle sub-6 GHz bands generally cost less than those that can also use millimeter waves. They also help simplify system designs.

Global shipments of 5G smartphones are seen growing to 120 million units in 2020, up from more than 35 million in 2019, according to estimates by market researcher IHS Markit. Shipments should continue surging after 2020, totaling more than 525 million units by 2023, said IHS Markit technology analyst Francis Sideco in a statement. Advanced 5G modem chips are also set to be slapped on routers, tablets, wearables and cars.

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