Qualcomm has leaped out to the early lead in advanced 5G modems used in smartphones, reinforcing its position as a key supplier to Apple, Samsung, and most of the world's phone makers. Now the company is trying to expand its footprint in 5G infrastructure with a line of radio access network (RAN) chips for building 5G base stations faster and more cheaply.
Base stations are a set of boxes that are installed on top of cell towers or buildings to connect smartphones and other devices to cellular networks. These boxes are largely sold by telecom equipment giants Ericsson, Nokia, and Huawei Technologies as all-in-one systems, each with proprietary combinations of hardware and software. These companies represented more than 55% of the telecom gear market last year.
Qualcomm said last month it would start selling baseband processing and radio frequency chips for the base stations behind new 5G networks. The company plans to sell the chips to customers that are rolling out "virtual radio access networks" that separate the base station into smaller modular blocks. That could help carriers to get around vendor lock-in and cut costs by mixing and matching hardware and software to meet 5G needs.
Shares of Qualcomm, long the world's largest smartphone chip vendor, have soared more than 70% over the last year as it unraveled legal fights with its largest customers, resolved regulatory battles, and integrated 5G into more of its products. It has been buoyed partly by bets that sales of its 5G baseband modems are on the verge of a boom. It is also selling 5G modems and other parts used in Apple's iPhone and Samsung's Galaxy.
Now, the company is also aiming to win more market share in 5G network infrastructure, which will be worth over $8 billion in 2020, according to market researcher Gartner.
The company declined to identify any of the early customers for its RAN products. But its customer list could include both existing telecom gear manufacturers and new players in cellular infrastructure, ranging from startups to server manufacturers including Cisco and Dell. Wireless carriers could also end up building base stations with Qualcomm's products.
It is fighting against Intel, Marvell, Broadcom, and others to supply many of the key components of base stations for 5G networks, which could offer far faster data rates compared to current 4G LTE technology. Qualcomm is also indirectly competing against the proprietary chips designed for 5G base stations by Ericsson, Nokia, Huawei, and other large telecom gear manufacturers.
Qualcomm said that the chips support both types of 5G technology, including millimeter waves that offer faster data speeds and more overall throughout but struggle over long distances. The millimeter waves are also vulnerable to being blocked or disoriented by walls and other objects. The chips add supplemental performance with the sub-6 bands that can broadcast over long distances without scrambling radio signals.
The new chips also have hardware accelerators that can handle the increasingly complex signal processing in 5G networks. The chips are ideal for Massive MIMO technology that concentrates signals from antenna arrays into spotlights that target many more devices at the same time, instead of casting signals in a wide cone like a floodlight.
A large amount of computing power is required to run the underlying beamforming technology, which boosts throughput and speed.
The three chips in the new lineup also feature a complete package of components, ranging from the baseband processors that manage all the radio functions in the base station to the antennas and radio frequency (RF) chips used to condition and amplify signals. Qualcomm sells the same sort of components—what it calls a Modem-to-RF system—for 5G phones.
The San Diego, California-based company already sells chips for use in small cells—the clusters of short-range base stations slapped on top of rooftops and lampposts to supplement the range of 5G networks. Qualcomm said the RAN products are targeted at other types of telecom equipment, including macro base stations that are the nuts and bolts of current 4G networks.
To support the speed and latency of 5G networks, companies are making major changes to cellular infrastructure. One of these changes is the shift to a virtual radio access network or vRAN architecture. vRAN technology splits the RAN into separate components, including radio units (RUs) that handle radio frequency signals from the antennas crammed in the base station.
There are also distributed units (DUs) to carry out the baseband processing for the base station.
Qualcomm said that it is selling chips that can be used in any of the functional splits between the baseband and radio unit, complementing its current 5G RAN offerings used in small cells.
Qualcomm said that the products also meet an emerging 5G standard called Open RAN, for open radio access networks. The standard would serve as the software interface for all the parts of the base station, giving customers the ability to choose baseband, radio, and other components from different vendors. Open RAN technology could also be cheaper than the end-to-end systems made by current vendors and linked together with custom interfaces.
That way, customers would select each component of the network based on features instead of buying complete hardware-and-software sets from telecom giants Nokia, Ericsson and Huawei.
The Open RAN standard uses software to guarantee that all the components can work together, mirroring so-called "white box" systems used in software-defined networking in data centers. The idea is to replace proprietary equipment used in the sprawling networks of data centers with cheaper commodity gear. That helps reduce costs for cloud service vendors and other technology giants
Open standards could also reduce the cost of deploying 5G networks, giving customers the flexibility to add features by upgrading different components of the network as needed. Open RAN technology, which is supported by both Nokia and Samsung, among others, is used to guarantee that the parts are interchangeable and will work together.
Open RAN infrastructure is projected to be 10% of the total market and account for around $5 billion in overall revenue in the next five years, according to market research firm Dell Oro Group.
The announcement could also be a boon to US ambitions to fortify its prowess in 5G, one of the top battlegrounds in the trade war with China.
Huawei, the world's largest telecom gear manufacturer, has struggled as the US and other nations ban Huawei's hardware from their networks. Last year, the US government blacklisted Huawei to block it from buying chips or other technology sold by American firms. And it has tightened sanctions in recent months.
None of the largest telecom gear manufacturers are based in the US. But the types of chips rolled out by Qualcomm, Marvell, Intel and others could open the door for US-based vendors to start amassing market share and compete with Nokia and Ericsson, both based in Europe, and Huawei, which controlled 28% of the market share in wireless networking gear last year.
A bipartisan group of policymakers in the US Senate has proposed $1 billion in funding for the development of open networking technology, in an attempt to stiffen competition with Huawei.
Qualcomm plans to start sampling the 5G RAN products to potential customers by 2022.