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Huawei’s position as 5G chip maker strengthened after Apple settles dispute with Qualcomm
Published on: 2019-05-07
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031The truce between iPhone maker Apple and semiconductor giant Qualcomm has redrawn the battle lines in the 5G chip market just as smartphone makers and carriers begin to move forward with trial deployments of the ultra-fast networks. The two US technology giants last week settled an acrimonious two-year fight, which had threatened the sale of iPhones in several countries including China, with Apple signing a six-year licensing deal with Qualcomm under which it will use Qualcomm chips for its iPhones. Within a few hours, Intel, which has supplied modem chips for iPhones since 2017 and was developing 5G devices for Apple, said it was withdrawing from the market for 5G chips for smartphones, but will continue 5G investment in other product areas. That put Shenzhen-based Huawei Technologies in the spotlight as a major player up against Qualcomm in the 5G modem chip market even though the Chinese company currently only uses the devices in its own phones.

033034Huawei’s 5G chip, the Balong 5000, is at least six months ahead of Qualcomm’s similar offering, according to Jean Baptiste Su, principal analyst with Atherton Research. Qualcomm’s X55 chip, unveiled at MWC 2019 earlier this year, will not appear in 5G smartphones until the end of this year or in early 2020. The Balong 5000 will start shipping in June, first with the Huawei Mate X phone and the Mate 20 X 5G in July, he added. Taiwan-based MediaTek, which competes in the lower end of the market, is not a direct competitor with Qualcomm at the high end, while China’s Unisoc, a subsidiary of state-linked semiconductor maker Tsinghua Unigroup, has just lost Intel as a technology partner. In February, Intel ended an agreement to share 5G modem technology with Unisoc amid heightened trade and technology rivalry between the world’s two biggest economies.

032Qualcomm, a dominant player in communications chips, provides half of all core baseband radio chips used in smartphones worldwide. Apple and Qualcomm have for years been locked in legal fights, suing each other in jurisdictions around the globe for alleged monopolistic practices, patent infringement, and even intellectual property theft. Qualcomm won an injunction against Apple in Germany in December, which resulted in a sales ban of some older iPhones in the country. Apple was later able to start selling the iPhone 7 and iPhone 8 in Germany again after swapping out Intel modems for Qualcomm’s equipment. Apple likely paid somewhere around US$5 billion to US$6 billion to settle its ongoing legal battle with Qualcomm, according to estimates by UBS analyst Timothy Arcuri, CNBC reported. Mike Feibus, president and principal analyst from Feibus Tech, said Apple did not have a choice. “I’m quite sure that if Apple felt it had another alternative, things would be different now. Intel was clearly ready to give up on 5G chipsets for smartphones, and agreed, for the benefit of Apple, to wait to announce until Apple settled with Qualcomm,” he said. “Given all the bad blood between them, Apple explored all the alternatives and concluded it had no other choice but to go with Qualcomm. Which means that it did not see any other viable suppliers.” After Intel’s retreat on 5G modems, Apple has to rely on Qualcomm as its sole 5G modem supplier.

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