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Intel debuts 5G base station chips as alternative to Huawei

US chipmaker teams up with Ericsson to grab 40% market share.

Intel Chip. Photo by Slejven Djurakovic on Unsplash Intel Chip. Photo by Slejven Djurakovic on Unsplash

US chip giant Intel has entered the 5G base station chip race with bold ambitions to be the market leader by 2021 in a bid to help telecom equipment maker Ericsson and other key partners take on Chinese rival Huawei Technologies.

The Santa Clara, California-based chipmaker on Monday introduced its first ever 5G integrated chip platform — the Atom P5900 — for use in base stations, the backbone of wireless communications infrastructure, as well as a series of related customized chips for next-generation communication technology.

“The Intel Atom P5900 will start being deployed this year as a key component of 5G base stations,” Daniel Rodriguez, Intel corporate vice president, told reporters. “Ericsson and ZTE have announced that they will use the Atom P5900 in their base stations.”

The executive said Intel aims to become “the market leader” with a 40% share of the market for base station silicon chips by 2021, a year earlier than the company’s previous estimate.

Intel’s aggressive foray into telecom equipment chips is an attempt to secure new sources of growth as the world’s biggest computer and server microprocessor builder has lagged behind developers such as Arm Holdings and Qualcomm in smartphone chips, and has faced mounting competition from smaller rival Advanced Micro Devices in its current businesses.

The American chipmaker’s move also gives a boost to US efforts to build up its prowess in 5G, the key battleground in the Washington-Beijing tech war. Huawei –which U.S. authorities have repeatedly flagged as a security risk — develops its own 5G chips for both smartphones and networking equipment.

The US, on the other hand, did not have a single company that possesses the capability to build both advanced consumer electronics and core telecom equipment.

Earlier this month, US Attorney General William Barr called for America to take controlling stakes in leading European telecom equipment makers Ericsson and Nokia to compete with Huawei’s “drive to domination.” Huawei last week said it has maintained its leadership in building 5G communication equipment and has secured more than 90 commercial 5G contracts globally. The Chinese company is slated to unveil its second generation of 5G foldable smartphones despite Washington’s blacklist blocking its access to Google Mobile Service.

“It’s clear that Intel is helping the U.S. gain some momentum in the ferocious competition in 5G-related technologies between the world’s two biggest economic powers,” Chiu Shih-fang, a veteran tech analyst with Taiwan Institute of Economic Research, told the Nikkei Asian Review.

“We think the 40% share in 5G base station chips by next year is quite ambitious. But if Intel could really team up with those key telecom equipment such as Ericsson, Nokia, and others to use its chips, it should be a reasonable growing business strategy,” the analyst said.

Huawei had 31% of the global market for telecom equipment segment in 2018, while Ericsson of Sweden and Nokia of Finland together controlled nearly 50%, according to the latest available data from IHS Markit. Samsung Electronics had 5% of the market over the same period. But while the South Korean tech company has been an underdog in the telecom equipment industry, it has emerged as an aggressive player in the race to build 5G infrastructure, securing contracts from several top carriers, including AT&T and Verizon in the US, as well as KDDI of Japan and major players SK Telecom and Korea Telecom at home, market watchers said.

Until now, Ericsson and Nokia have designed their own chips in-house and also asked developers such as Broadcom to help develop base station chips. Huawei, on the other hand, designs such chips in-house and has TSMC to manufacture them. Samsung, which is also the world’s biggest memory chipmaker, designs and manufactures its own 5G base station chips itself.

Intel said its first integrated 5G base station chips will adopt the company’s advanced 10-nanometer chip production technology and will be available this year. However, Intel has suffered manufacturing constraints since the second half of 2018 due to a bottleneck in its newest 10-nm chip manufacturing technology and its deal to supply modem chips for iPhones. Many computer makers such as Asustek Computer and Acer suffered shortages of central processing units for more than a year and have turned to Intel’s smaller rival AMD for processor chips.

Intel CEO Bob Swan in January told investors that it will continue increasing capital expenditure to solve the supply shortage issue. “We’re continuing to add capacity so we’re not constraining our customers’ growth. … Our near-term challenge is working with our customers to support their desired product mix,” Swan said.

Intel last year sold its smartphone modem business to Apple for $1 billion and officially dropped out of the mobile modem business.

That means the networking equipment sector could be one of the last chances for the U.S. chip titan to capitalize on the 5G boom. Last November, Intel teamed up with MediaTek, the world’s second-largest mobile chipmaker after Qualcomm, to jointly develop 5G-capable laptops.

This article first appeared on Nikkei Asian Review. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei. 36Kr is KrASIA’s parent company.