Now 3 generations of 5G chipset and the market is expanding
In 2019 and 2020, the 5G chipset market has seen several announcements that points to both an increased maturity and competition on the market. While Qualcomm has announced its third generation discrete 5G baseband, the X60, aimed at the high-end portion of the market, several mid-end 5G chipsets have been announced, not only by Qualcomm, but also its competitors. While first integrated 5G SoC announced can be dated back to September 2019 with the Samsung Exynos 980, followed by Huawei/HiSilicon Kirin 990 5G, all targeting the high end market, the end of 2019 and beginning of 2020 has seen several other 5G SoC announced and launched by Qualcomm (SD765/765G with its updated version the SD 768), Huawei (Kirin 820 and 985 5G), Samsung (Exynos 880) and Mediatek (Dimensity 1000L and 1000+ as well as the lower end Dimensity 820).
This profusion of chipset announcement and launch indicate that competition is going to increase for Qualcomm, especially in China, where the aggressive 5G deployment will also benefit domestic players with the need for affordable 5G phone for mobile carriers. And indeed, the first months of 2020 have been dominated by the expansion of the offering for this segment of the market. The launch of Qualcomm Snapdragon 768, just a few months after the announcement of the SD765/765G in December can indeed be seen as an answer to the likely positioned Dimensity 820 / Exynos 880 / Kirin 820 which all address the same target.
As an indication that the expansion of 5G is set to go on and reach new lower end market, Qualcomm announced the Snapdragon 690. Interestingly, and as can be seen in the figure bellow, there are now more 5G SoC than discrete 5G baseband on the market and this trend has only expanded since our last update in June 2020.
All those new chipset have in common that they only support the sub 6 GHz frequency range, which is basically the reason for more limited performance than higher end chipset supporting mmWave but also for the reduced price range required for the market that they target. Given the initial focus of operators on the deployment of 5G in those frequency band, especially as new features such as DSS enable further deployment in even lower bands, the absence of mmWave should not be an issue.
As of the end of September 2020, around 31 5G chipsets had been in development or released but at the same time, only 19 chipsets could be considered as commercially available (5 from Qualcomm, 5 from Huawei, 4 from Samsung 3 from Mediatek and 2 from UniSoc). As of end of September 2019, we reported only 5 of them and only 8 at the end of December 2019.
It is to be noted here that in this count of 5G chipset. Discrete 5G modem that are not sold separately, such as the X52 or x51 Qualcomm modem are not included, even though, as such they could be considered as modems.
Presentation of announced 5G chipsets
Source: IDATE DigiWorld, September 2020
What differentiates those chipsets?
The number of feature sometimes makes it difficult to differentiate all those chipset and indeed a lot is shared on the paper. Below are the features where 5G chipset might differentiate:
- Support for Standalone mode (SA). While the 1st generation of 5G modem only supported the Non Standalone mode, all 5G chipset now support both NSA and Standalone mode, this way of deploying 5G that make it independent from 4G and where both the user plane and the control plane are handled by a native (and virtualized) 5G Core. The existing of NSA only device on the networks explain why SA won’t simply replace NSA but will likely coexist for some years to come.
- Capability to aggregate up to 2 carriers of 100 MHz (FDD and TDD) in the sub 6 GHz frequency band: this enable increased performance in the sub 6 GHz, as early chipset were not capable of aggregating FDD and TDD spectrum , which is quite common to have for an operator.
- Capability to aggregate up to 800 MHz of spectrum in the mmWave: indeed lower cost 5G chipset can support up to 400 MHz of bandwidth.
- Capability to aggregate sub 6 GHz and mmWave spectrum for increased maximum throughput up to 7.5 Gbps (Qualcomm x60). This is especially important for increased coverage and will ease the transition for operator from NSA to SA.
- Support for mmWave band: Because the deployment in those frequency band has so far been limited outside Verizon, the absence of support for mmWave is not an issue and an opportunity to develop lower end / cheaper 5G chipset, while still providing an enhance user experience over 4G.
- Support for DSS (Dynamic Spectrum Sharing) feature, which enable the dynamic deployment of 5G in 4G bands, as standardized within 3GPP (instead of dedicating fixed portion of spectrum to RAT as was usually done with refarming.
Those capabilities differentiate chipset between each other and often between the different generations of 5G chipsets.
State of the competition
The 5G baseband market is quite different from the 4G and earlier generation baseband market. Actually, each new generation of cellular technologies has seen a player leaving the market and a new one emerge. As an example, TI left the baseband market with 3G and Infineon sold its cellular asset to Intel. In 4G, several players left the baseband market, such as Broadcom, despite several acquisition or Fujitsu. With 5G, Intel was the first to leave the (device) baseband market by selling its cellular assets to Apple. Due to the economic war between the US and China, the future of Huawei chipsets, with the inability to rely on TSMC foundry 5nm process starting on 15th of September 2020 is also uncertain.
In 5G Qualcomm is still considered the leader in market share but recently, the rise of Mediatek with its Dimensity range of 5G modem, now commercially available is somehow changing the competitive landscape and this is particularly true in China where tensions with the US put Huawei in a difficult situation regarding its chip design capabilities. While Samsung and Huawei, number one and two in the smartphone market are mostly using their chipset internally, this situation might change in the future, as both chipset manufacturers have been mentioned as selling their chipset to other device manufacturers, mostly Asian one. In a not so distant future, they will both be joined by Apple, after the Cupertino company acquired Intel cellular assets for mobile devices. For now, Qualcomm is still benefiting from this situation, since Apple is not currently capable of using its own silicon for 5G connectivity and has inked a licensing deal with Qualcomm to use their 5G products.
Mediatek and Unisoc, two rising baseband players in the 5G field
If Qualcomm, Huawei and Samsung are the top three 5G baseband players, two other vendors (excluding Intel that dropped the 5G baseband market) have announced 5G solutions, Mediatek and UniSoC. Mediatek, after announcing the Helio M70 back in June 2018 announced its integrated 5G SoC in May 2019 and has seen its first OEM commercial product launched at the end of December 2019 with the Oppo Reno 3 that is now sold in China. With this mid-end solution, Mediatek is well geared too to increase its position in the 5G device market and it also announced its lower tier 5G solution at CES in January 2020 with first commercial devices with this solution to be launched during the 1st half of 2020 (but that may very well slip in H2 due to COVID-19 epidemic). Due to the tensions with the US, Huawei might however be forced to rely on Mediatek chipsets in the future.
As for Unisoc which announced the Makalu Ivy510 at MWC 2019, it is targeting the (Chinese notably) mid-tier smartphone and IoT market. Unisoc was previously known as Spreadtrum and had development partnership with Intel for LTE chipset for Chinese device but the partnership over 5G has been dropped and Unisoc is now following its own route and it announced in February 2020 its 2nd generation 5G chipset, the T7520 SoC, which Unisoc claims as “the all-around leader in power consumption for both light-load and heavy-load scenarios and delivers a power consumption reduction of up to 35% for some data business scenarios.”, a claim, which of course remains to be verified.
After failing to grab 4G device customers (except Apple), Intel forced to quit the market
In April 2019, as Qualcomm and Apple announced they had dropped all litigation worldwide and reached a 6-year license agreement together with a multi-year chipset supply, Intel followed with the announcement that they would quit the 5G smartphone modem market. Intel had announced two 5G basebands in November 2017 and 2018, the second one believed to replace the first one, but although Intel stated that those products would be available during the 2nd half of 2019, there was skepticism on its ability to achieve this timeline. Reportedly, Intel had difficulties in developing its 5G smartphone baseband and faced multiple delays in the development of their 5G offering.
In a context of severe legal battle with Qualcomm over IP licensing and royalties, Apple had tried to diversify its sourcing of 5G connectivity solutions and was known as Intel’s (by far) biggest customer for cellular baseband. Because of Intel delays in the development of its 5G solution and market pressure for Apple to develop a 5G iPhone, Apple saw the solving of its dispute with Qualcomm as the most relevant way of solving this issue. This, plus Intel’s difficulties in its development led Intel to leave the 5G baseband market, reportedly focusing on network infrastructure instead.
This news is of particular interest in the development of the 5G device ecosystem. Despite the supply agreement with Qualcomm, Apple is believed to be continuing the development of its own 5G chipset, something that will still take time for Apple, 2023-2025 being the horizon often mentioned by analysts for an Apple modem to reach a commercial iPhone. At the end of July 2019, Apple purchased most of Intel 5G business for that matter for 1 billion USD. This will enable Apple to integrate its modem more closely in its own Ax SoC and thus reduce power consumption and release place for other component thanks to the reduced footprint within the device.
In the meantime, Apple is developing its next flagship iPhone based on Qualcomm 5G modem, likely a x55 modem. Recently, rumors emerged over the willingness of Apple to develop its own antenna system instead of Qualcomm antenna module. Because of COVID-19 outbreak, the release of the first 5G iPhone. So far, and despite fears of lack of interest for a smartphone without 5G, iPhone 11 is ranking as the most successful iPhone. The iPhone 12 should be announced in October 2020.
Mid-range 5G chipsets set to invade the smartphone market
In 2020, 5G chipsets have continued their expansion in lower-tier smartphone with several announcements already mentioned. In order to maintain a right Bill of Material for its mid-tier platform Qualcomm for instance has created a new baseband, the X52, that is not as powerful as the x55 that was announced in February 2019. Indeed, this x52 support half the throughput of the x55 that will be paired with the Snapdragon 865 because of a capability to aggregate only half of the spectrum that the x55 is capable of aggregating. As an example, the x55 can aggregate up to 800 MHz in the mmWave bands (8×100 MHz) while the x52 in the SD 765 can only aggregate 400 (4×100 MHz). The same goes with sub-6GHz where the x55 can aggregate up to 2×100 MHz vs 100 MHz for the x52. In the end, what this choice reveal is the strategy to streamline 5G support down the tier-range. The same strategy was used for the launch of recently announced Snapdragon 690 with the creation of the x51 modem.
As an indication of 5G smartphone ecosystem evolution, while the average selling price of 5G smartphone was around 650 EUR in China in 2019, low-end 5G smartphone around 130 EUR could see the light of the day by the end of 2020 according to Huawei.
In September 2020, Qualcomm announced that it would expand its 5G platform to its Snapdragon 4 series in early 2021.
2. 1st 5G devices are there and not only dongles and CPEs
The release of 5G baseband and RF systems is the first step before commercial devices. Usually, when a new radio technology is released, basebands are developed and implemented in relatively simple devices such as mobile WiFi hotspots, before more complex devices such as smartphones, where integration is always more challenging. Before fully commercial devices can be made available, several steps are required.
The steps a device takes to market
Source: IDATE DigiWorld, September 2018
This time, with 5G, Fixed Wireless Access was one of the first use cases, rather than mobile usage and first commercial devices announced have been 5G home routers, such as the one announced by Huawei at MWC 2018 in Barcelona, or the one by Samsung. Those early devices have been more specifically designed for carrier partners Verizon in the US and in South Korea, and have already received their approval by the FCC.
Huawei and Samsung 5G home routers for 5G Fixed Wireless Access
Those first devices are available in indoor and outdoor versions. Since then however, the ecosystem has continued its expansion alongside that of the smartphone devices. An illustration of this is the announcement in October 2019 by Qualcomm that over 34 OEMs planned to use its X55 5G modem alongside a specifically designed for FWA antenna solution.
OEMs planning to launch Qualcomm based x55 5G FWA CPEs
As an indication of the traction of 5G FWA CPE devices on the market, the evolution of the number of 5G FWA CPE devices is available below. Between Q3 2019 and Q4 2019, the number of such devices listed more than doubled. According to Gsacom, as of the end of May 2020, 33 operators had launched 5G FWA services in the world.
Growth of the number of 5G FWA CPE devices announced
Smartphones and modules, most popular form factors indicate an already relatively rich ecosystem powered by 5G basebands
But since those early 5G devices designed for fixed wireless usage, the first mobile 5G networks have been launched in the world and the device ecosystem, thanks to the enabling basebands, has “considerably” widened. As of end of May September 2020, indeed, Gsacom reported 444 5G devices announced by 96 different vendors and 20 different categories of form factors, some of which are fairly similar. As a comparison, in December 2019, Gsacom reported around 15,000 different LTE devices. Of those 444 5G devices, at least, 222 are commercially available, which is a doubling as compared to May 2020 and certainly indicates a momentum in the building of the ecosystem.
Growth of announced 5G devices (not all commercially available) as of end of September 2020
Simplified distribution of the 5G device ecosystem as of end May 2020
Source: Gsacom, as of the end of September 2020
The fact that smartphones are the 1st category of devices announced together with modules is a noteworthy fact. CPEs and modules, are usually the first devices to go to the market when a device ecosystem is building up but smartphone usually come afterwards.
In detail most of the devices launched in 2019 have been based on Qualcomm Snapdragon 855 along an X50 modem but in 2020, most devices will be based on second generation 5G baseband and heated competition with first devices powered by Mediatek 5G solutions. While initial 5G devices often had either sub 6 GHz, either mmWave RF system, 2020 should also see first mmWave+sub6 GHz devices. The reason for not including support for both frequencies is to be found in the different geographical/market choices regarding frequency bands for deployment, but also in the cost that those additional frequency bands incur. At this stage, the RF and antennas add a significant toll to the total Bill of Material (BOM) of 5G devices without even talking of power consumption, time has not yet come for worldwide 5G devices supporting all the 5G frequency bands. One important aspect though is that 5G devices that will be released in 2020 will support sub 6 GHz FDD and not just TDD. While TDD mode is important for mid and high frequency bands, FDD is key for lower frequency bands (those frequency bands used for 2G, 3G and 5G). While those band will sport more limited throughput, they will be key for 5G roaming, as operator will be vying for expanded coverage and SA deployments.
Tomorrow, as lower-tier 5G solutions are released on the market thanks to a wider 5G baseband/SoC portfolio, the premium price for 5G device should decrease. This decrease of price will come principally at this stage of cost optimizations and “reduced” 5G performance as compared to high-end 5G solutions as exemplified by the difference between the Snapdragon 765 and the x55 modem that is found in the snapdragon 865. The 5G performance of the Snapdragon 765 is still far better than the best 4G possible performance, topping at a theoretical downlink throughput of 3.2 Gbps but is still below the 7.5 Gbps that the x55 is capable of. Of course, this differentiation doesn’t really matter when the capabilities of the network do not even match this level of throughput.
“5G ready” smartphones are going to be marketed
An interesting thing to notice is the fact that because of longer replacement rate in some countries (closer to 4-5 years than 2 years) for smartphones, some MNOs will rather sell 5G-ready devices (i.e devices supporting 5G even though 5G has not yet been deployed in the network) than 4G only device. The rationale for this carrier demand is to be able to switch as many users as possible on the less-costly 5G network when it is deployed. In countries where 5G launch are imminent, the same decision could be taken by operators and also device manufacturers that want to be able respond to the consumer demand not to invest in 4G phones when 5G is coming soon.
The 3.5 GHz frequency band, not mmWave is the most popular frequency bands for 5G
Despite much noise around mmWave bands deployment abroad, the sub 6 GHz device ecosystem is doing strong and especially the 3.5 GHz band which provides interesting capabilities with a mix of coverage and capacity when wide bandwidth configuration are used (100 MHz). More precisely, the n78 band (3.5 GHz) is the most popular frequency band in terms of devices announced mirroring the sizeable number of network believed to use this frequency band. Given the wide availability of this frequency band worldwide, this is not a big surprise but definitely an interesting fact for European 5G networks. While not providing as much bandwidth as mmWave bands (largest possible bandwidth configuration is 100 MHz) it is providing a much larger coverage. As compared to lower frequency bands, it still sport better capacity and is better suited to massive MIMO deployment in the field because of the much smaller antennas required.
Thanks to features such as Dynamic Spectrum Sharing (DSS), a 5G device ecosystem for “legacy frequencies” is also being built with devices announced supporting several of those bands (such as the much used 1800 MHz, 2100 MHz or 700 (APT) MHz) especially as operators in the US (AT&T and Verizon but also T-Mobile without DSS) are starting to deploy in those low bands. During the last two quarters, the number of devices supporting those frequency bands has grown substantially indicating a clear interest from operators in those frequencies as they prepare to leverage their existing asset in complement to mid frequency band.
Not surprisingly again, much of the mmWave device ecosystem is driven by the need to support US 5G network but this is gradually changing in 2020 as other mmWave deployment occur in countries such as Korea and Japan. While no devices had been announced for n258 (26 GHz) band in December 2019, (the mmWave frequency of choice in Europe (and China) for latter deployments), this band has humbly jumped from 0 to 3 devices in March 2020 to 5 at the end of May 2020, which for now still remains anecdotal. As of end of September 2020, no other devices supporting this band had been listed.
Distribution of announced 5G devices by range of frequency band
Source: gsacom, halberdbastion and IDATE * Note that one same device might be listed several times in different category when supporting several bands at the same time
3. Infrastructure ecosystem
Infrastructure equipment is probably even more important than devices in the early building of an ecosystem, as they are used to test the technology features and concepts, even as the technology is being standardized within 3GPP. Equipment vendors were early in announcing their effort in building 5G technology, often by announcing trials efforts with Mobile Network Operators and/or chipset manufacturers. Those demonstrations were often focused on pieces of technologies or concepts, such as Massive MIMO, the use of mm-wave in different mobility scenarios…
Industry efforts have now resulted in early (and accelerated) standardization of the technologies and as more than 70 operators now have launched a 5G network throughout the world, most equipment vendors have completed their 5G portfolio to meet the various needs of the market. Those solutions share more or less the same features, although each vendor has designed its solution around its main strength. These features are:
- 3GPP Release 15 compliance: Release 15 is the first official release of 5G. Before that, some equipment vendors have worked around unfinalized versions of the standard, or as is the case of network operators having built a pre-standard (such as Verizon with the 5GTF). As the Release 15 of 3GPP has seen its specs frozen, infrastructure equipment now highlights their full Rel. 15 compliancy.
- End-to-end offering: in the race to being the most advanced vendor, it is important to show full end-to-end product portfolio, which means having a core network solution, a transport solution, a base-station adapted to different scenarios (e.g. such as indoor or outdoor), and a “front-end” solution with diverse antenna solutions.
- A (virtual) core network solution: this is built to be deployed in the cloud for maximum flexibility and to support the deployment of certain network functions at different places in the network, in a centralized or more or less distributed (up to the edge of the network) way.
- Support for massive MIMO: Massive MIMO, beam forming and beam tracking and beam steering are key features to attain increased spectrum efficiency in 5G. The support of this feature is thus key for equipment vendors to assert 5G ambitions.
- Support for sub 6 GHz and mm-wave: While mm-wave has received much of the attention in the race to 5G because of all the challenges associated in operating a radio network in these frequency bands (the 26 and 28 GHz bands notably), but C band below 6 GHz has also seen traction because of its roaming capabilities for 5G. In Europe, nearly all 5G deployments that have already taken place have been in this band rather than in the 26 GHz band, because of its better coverage capabilities and the feeling of operators that they are not yet running out of capacity (as compared to the U.S. for instance).
As Release 15 is now fully supported by equipment vendors and as first 5G Standalone Network with a native 5G core are to be launched by the end of 2020, Release 16 is about to be finalized. Initially supposed to be frozen in March 2020, the next Release of 5G has seen its frozen date postponed to June 2020 due to COVID-19 epidemic. It should now be completely finalized by the end of this year and first compatible equipment should be launched shortly after.
Release 16 is considered as the phase 2 of 5G and is aimed at complementing the previous release after the initial calendar was quicken to enable early 5G deployments. Release 16 brings the following capabilities:
- NR-U: it will now be possible to deploy 5G NR in unlicensed spectrum, not only with an anchor in licensed spectrum but also as standalone. This is notably aimed at serving the development of 5G private networks. NR-U will also make it possible to have an anchor in unlicensed spectrum.
- URLLC: While Release 15 focused on eMBB use case, Release 16 will support ultra-reliable low latency communication for critical applications. It is notably aimed at serving the needs of the Industrial IoT.
- Improvement to CV2X communication with support of communication directly between the vehicles under and out of coverage thanks to PC5 interface.
- Integrated Access Backhaul: to support the densification of the network when fiber is not easily available, it will be possible to use a NR wireless link from central locations to distributed cell sites and between cell sites.
- Other enhancement to existing features: Massive MIMO, Dynamic Spectrum Sharing …
The figure below present the update roadmap for 5G standard development:
5G standard development roadmap
Presentation of the 5G portfolio of the main equipment manufacturers
Below, we present the 5G portfolio of each equipment manufacturer. Their claim is mostly similar and as for device baseband, those claims can be seen through different angles. Table 12 below summarizes what stands out from each vendor solution:
Infrastructure equipment 5G solutions from major vendors
Source: IDATE DigiWorld, June 2020
Open RAN and the expected rise of new network vendors
As the native 5G core network will be fully virtualized, the virtualization of the Radio Access Network (RAN) and the development of new RAN architecture is paving the way for the implementation of open and interoperable solutions on the network.
Initially pushed by MNOs to end their dependency on one or two single equipment provider it has been seen as an opportunity for new players to enter the RAN market with software solution while traditional equipment vendors excepting Huawei have been forced to more or less timidly supporting the movement to continue working with some Tier 1 mobile operators.
Mapping of new equipment vendor
Source: IDATE DigiWorld
In support of the development of a standardized interface between the different equipment that make up the RAN, alliances have been formed such as the TIP (notably) or the ORAN Alliance. More recently and in a more political approach, the Open RAN Policy Coalition has been formed in the US. Indeed, in the country, with no more mobile infrastructure equipment vendor on the market, the move is seen as way to rebuild a presence for infrastructures also considered as strategic for the independence of the country.
While still relatively limited in its breadth this move should be seen as a solid trend for the years to come. While “legacy” equipment vendors have initially developed a virtualized RAN solution, those solutions remained proprietary and did not provide the openness that operators had been calling for.
Recently, certain move by both greenfield operators and legacy operators have shown that the ecosystem was moving in the right direction. If the launch of Rakuten fully virtualized 4G network in Japan is being observed carefully, massive testing by major telcos such as DoCoMo in Japan, Etisalat in UAE and Telefónica are also an indication that Open RAN is there to stay.
At this point of development, Open RAN solution still lack maturity as compared to more integrated and proprietary solution as it require new (IT) competencies that few operators have yet. One issue with Open RAN today lies in the fact that, as operators are deploying a new Radio Access Technology, they also need to have an end to end control of what is happening in the network (especially as network slicing is seen as a way for operators to transform their business model). The more vendors solutions are deployed in the network, the more difficult it is to identify where error come from when they arise.
In the years to come thus, new equipment vendors are going to continue to progress on the market but biggest “legacy” vendors are not yet threaten, even though they need to rethink their positioning.
Presentation of main new equipment vendors
Source: IDATE DigiWorld
5G expanding into lower frequency band for increased coverage (and capacity)
In 2020 and beyond, after early deployments, 5G will slowly expand its coverage thanks to lower frequency bands. This however won’t be possible without flexible solution such as Dynamic Spectrum Sharing (DSS) which enable to seamlessly and dynamically “refarm” 4G spectrum for 5G application. Instead of dedicating a fixed portion of a frequency band to 4G or 5G, the idea is to support both 4G and 5G users in the same frequency band. It is especially useful for sub 3.5 GHz bands used by 4G (the mid and low frequency bands of 5G) as it will expand 5G coverage outside the spotty area where “higher band 5G” has been deployed. This feature is part of 3GPP Release 15 and while its support has been announced first by Qualcomm with its x55 5G chipset at MWC 2019, it is/will be supported by most of the 5G baseband players as well as most equipment vendors which have announced support for this feature. Ericsson is today considered as a leader but Samsung, Nokia, ZTE have all announced their solution. Quite uniquely, ZTE supports the deployment of a third radio access technology such as 2G or 3G together with 4G and 5G.
It should not be seen as a way to deploy 5G in a single band but as a way to increase throughput in low frequency bands where little bandwidth is available. DSS is thus meant at being used in carrier aggregation configuration. In the very low frequency bands such as in the 600 MHz or even in the 700-800 MHz band, the spectrum available is often very limited and as such offer very limited performance.
It is to be noted that while the solution seem interesting on the paper, as every new technology, it also needs some maturation. Indeed, it has been reported that some DSS solution could incur a reduced spectrum efficiency on the 4G part of the spectrum. As a result from this initial situation, some operators could initially decide to allocate fixed portion of their spectrum to 4G and 5G instead of dynamically managing the allocation of resource depending on the network load.
The increasing importance of semiconductor in building a differentiated portfolio
With the ever complexification of radio technologies, and in a very competitive environment, the chipset within the infrastructure is increasingly becoming a matter of differentiation. But as most of the main equipment manufacturers are today claiming to somehow design their own chipset, making bad choice can decisively impact competitiveness as recently experienced by Nokia.
Nokia indeed introduced its 1st generation of ReefShark chipset in January 2018 touting its capability to enable the reduction of massive MIMO antennas by a factor of two while reducing the power consumption of baseband unit by 64%, a key benefit as both size, weight and power consumption have a direct impact on operator OpEx. However, in order to achieve this prowess, Nokia made a chip design choice that put the Finnish vendor in a difficult position. Indeed, by making the decision to use FPGA, a programmable chipset, rather than a dedicated ASIC, Nokia actually quite negatively impacted its product margin. FPGAs indeed, provide flexibility by enabling to reconfigure the chip after it has been designed, something that Nokia believed to be an advantage. But that turned out to be a serious disadvantage as FPGAs are more expensive than ASICS and the time to market that this design choice was supposed to bring disappeared as one of its supplier experienced difficulties in the manufacturing of the chipset with its 10 nm foundry process. Nokia finally departed from this design choice by finally designing a more competitive SoC through partnership with silicon specialist such as Broadcom, Intel and Marvell for its range of product. This turn of event however quite negatively impacted Nokia’s competitiveness. As of March 2020, Nokia indicated that 17% of its 5G products were powered by Reefshark with the objective of reaching 35% by the end of 2020, 70% by the end of 2021 and 100% by the end of 2022.
Because of the limited margin in the industry and the pressure on price that Chinese vendor Huawei has been able to impose, every point of margin is key, either to reinvest in Research and Development, either to more aggressively compete on prices.
Meanwhile, Huawei launched its 1st generation of own 5G base station processor called Tiangang in 2019, while Samsung launched its 2nd generation of base station chipset the same year. While other vendor Ericsson and ZTE are also said to design their own processors, they also ended up partnering with silicon specialist Broadcom and Intel.
5G infrastructure contracts announcements
In the race to 5G contracts for equipment manufacturers, it is difficult to say who is really winning so far because of not all the figures being released and made public. Ericsson for instance states that it currently has 78 5G commercial agreements or contracts with unique operators out of which 31 have been publicly announced and out of which 24 are live 5G networks. While the American ban on Huawei has been seen as an opportunity for its competitors it has not prevented the Chinese infrastructure vendor to claim the leadership in the past but this is something that is difficult to follow over the time. Recently, Huawei claimed at last 60 5G contract of which with 28 European operators. As for Nokia, it secured 50 commercial contracts for 5G at the end of October, making it potentially the last of the 3 equipment vendor in the 5G race
But figures do not tell the whole story. Behind the figure, indeed, Nokia has claimed in the past to be leading in terms of the comprehensiveness of the 5G solution sold to operator. In an article to Fierce Wireless, Sandro Tavares, Nokia’s head of global mobile networks marketing said that “More than half of the deals that we have signed actually include more than just radio”. It should be noted here also that most of the MNOs usually contract with several network vendors.
Network contracts announcement by infrastructure vendors – September 2020
Source: IDATE DigiWorld