The risk reward profile for attending MWC 2020 is deteriorating by the day

Intel is among the latest major exhibitor to pull out of MWC as rapidly diminishing attendance makes the risk of coronavirus infection increasingly hard to justify.

Many of the most recent cancellation announcements have come from US companies or ones with a major US presence. A major reason for this will be how vigorously litigious the Americans are and thus the massive legal risk companies put themselves in if they knowingly put their employees in harm’s way.

“The safety and wellbeing of all our employees and partners is our top priority, and we have withdrawn from this year’s Mobile World Congress out of an abundance of caution,” said the Intel statement. “We are grateful to the GSMA for their understanding and look forward to attending and supporting future Mobile World Congress events.”

US telecoms R&D company Interdigital is another to have thrown the towel in today and our conversations around the industry indicate a lot of other US companies have made the decision not to attend, but haven’t formally announced it yet. On top of that Chinese attendance will be massively diminished, in part due to the impracticality of self-quarantining for two weeks prior to the show, but again many formal announcements are being delayed.

One reason for this could be the game of financial cat and mouse show organiser GSMA will now be having to play with its exhibitors and attendees. We asked the GSMA what the cancellation conditions are but have yet to hear back from them. The MWC site offers the following cancellation terms for attendees, but the exhibitor terms don’t seem to be published.

Whether those gratuitous block capitals have been inserted recently we can’t tell, but it looks like the GSMA is determined not to be out of pocket, and you can see why. A few years ago Light Reading looked into the cash the GSMA make from MWC and came to the conclusion it trousered over $35 million in profit in 2014. Since the show has grown dramatically since then, a figure closer to 50 mil doesn’t seem at all inconceivable.

The GSMA is not for profit, so it’s safe to assume a lot of what it makes from MWC is accounted for by staff costs. Such a huge, unexpected hole in its balance sheet is bound to have profound organisational implications. So not only is the GSMA is a very difficult moral position over the prospect of creating a giant human petri dish in Barcelona, the financial implications of cancelling, after which it would presumably be obliged to refund exhibitors and attendees, are colossal.

If not before it looks like some kind of further decision will be made this Friday, with a couple of major Spanish papers reporting the major operators that actually own the mobile trade association are getting together to make a call. Those papers presumably have sources within the venue and we have to assume there is regular dialogue between the Fira and the GSMA about how much the latter has to pay the former in the case of a delay or outright cancellation.

As ever with things like legal liability and insurance it all comes down to blame. Right now it still seems to be down to the discretion of the individual or company whether or not they’re willing to take the risk of contracting coronavirus in Barcelona, but that could change. The GSMA likes to refer to the World Health Organisation for the latest on the coronavirus situation and if the WHO officially upgrades it to a pandemic, that could shift a lot more of the financial liability over to insurers.

That in turn would probably precipitate the cancellation of MWC 2020 as, even if the GSMA still wanted to go ahead, what little incentive people have to risk attending will have been removed. But even if the WHO never makes that move, the risk/reward profile for exhibitors and attendees is getting worse by the day.

Even if you leave aside concerns about coronavirus, MWC is an operator show and most people attend to get precious face time with operator execs and try to flog them stuff. If those execs aren’t there, then what’s the point in making the effort? Every single cancellation announcement makes further ones more likely because, even if none of their upfront costs are refunded, people will quite reasonably conclude there’s no point in throwing good money after bad.

Intel sets new record with $72bn 2019 revenues

Chip giant Intel has set a new record for full-year revenues, collecting $72 billion across the course of 2019.

For the final three months of the year, Intel brought in revenues of $20.2 billion, an increase of 8% year-on-year, while sales for the 12 months can in at $72 billion, a 2% increase compared to 2018. Net income remained flat for the year at $21 billion.

“In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” said CEO Bob Swan.

“One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns.”

Although Intel has faced its difficulties over the last few years, it seems shareholders are very pleased with performance, a month into Swan’s tenure. Share price has jumped 19% over the course of the last six months, including a 5.5% increase in overnight trading since the results have been announced.

Looking at the individual business units, the Data Centre Group revenues increased to $23.5 billion across the year, up 2%. The IOT business unit brought in $3.8 billion, up 11% compared to 2019. The PC-centric business increased revenues 2% in the final quarter, but performance was flat across the year bringing in $37.1 billion.

Under intense competition from the likes of Advanced Micro Devices though it appears enthusiasm for product launches at CES earlier this month have been backed up on the spreadsheets.

Intel drops $2 billion on AI chip maker Habana Labs

Having once more failed at mobile, US chip giant Intel is doubling down on the datacenter, where artificial intelligence is expected to be ever more prominent.

Spending two billion bucks on AI chip maker Habana Labs is a major statement of intent in this regard. The Israel-based company specialises in programmable deep learning accelerators for the datacenter. Intel already has a strong position in general purpose processors used in that environment, but is under pressure when it comes to AI from rivals such as Nvidia.

“This acquisition advances our AI strategy, which is to provide customers with solutions to fit every performance need – from the intelligent edge to the data center,” said Navin Shenoy, GM of the Data Platforms Group at Intel. “More specifically, Habana turbo-charges our AI offerings for the datacenter with a high-performance training processor family and a standards-based programming environment to address evolving AI workloads.

“We know that customers are looking for ease of programmability with purpose-built AI solutions, as well as superior, scalable performance on a wide variety of workloads and neural network topologies. That’s why we’re thrilled to have an AI team of Habana’s caliber with a proven track record of execution joining Intel. Our combined IP and expertise will deliver unmatched computing performance and efficiency for AI workloads in the data center.”

Habana will remain semi-autonomous with Chairman Avigdor Willenz (pictured) hanging around for a while. Intel says its AI-driven datacenter business is growing 20% annually and will bring in $3.5 billion this year. With datacenters becoming an evermore important component of telecoms networks, this looks like Intel’s best remaining hope of capitalising on an industry that has eluded it for so long.

Intel fires one final bullying accusation at Qualcomm

Months following the well-publicised sale of its smartphone modem business to Apple, Intel has hit out at Qualcomm, accusing the semiconductor giant of market dominance misbehaviour.

Intel has now filed a brief with the US District Court of Northern District of California supporting the Federal Trade Commission (FTC) and opposing Qualcomm’s appeal, as the semiconductor giant fights against the condemning decision it is unfairly destroying market competition.

“Intel agrees with the District Court’s findings,” said Intel General Counsel Steven Rodgers.

“Intel suffered the brunt of Qualcomm’s anticompetitive behaviour, was denied opportunities in the modem market, was prevented from making sales to customers and was forced to sell at prices artificially skewed by Qualcomm. We filed the brief because we believe it is important for the Court of Appeals to hear our perspective.”

The anti-competition spat between the FTC and Qualcomm has been going on for years now, though it did seem to come to a head over the summer. The District Court ruled Qualcomm was abusing its position as market leader, strangling competition with unfair pricing models to effectively maintain a monopoly, though Qualcomm filed an appeal in July to reverse the decision.

Although Intel now has no skin left in the game, it sold its own 5G modem business to Apple earlier this year, reportedly for $1 billion, it is seemingly attempting to throw one last bitter barb at Qualcomm.

Intel has said in the filing that it was forced to exit the market because of the anti-competitive behaviour of Qualcomm. Through complicated and suspect contract negotiated with customers, Intel could not make the business profitable, which it now argues ultimately creates a negative gain for the consumer.

Interestingly enough, this is not the only voice of support for the FTC and in opposition of the Qualcomm appeal. Trade groups representing the likes of BMW, Continental, General Motors and Ford have also said if Qualcomm wins the appeal and is allowed to continue its current business model, it would create a precarious position for the emerging connected car segment.

On the other side of the fence, Qualcomm is mustering its own support. The US Department of Justice, the Cause of Action Institute and the Alliance of US Start-ups and Investors for Jobs have all filed amicus briefings in support of Qualcomm, and a reversal of the original antitrust decision from the US District Court.

While being found guilty of anticompetitive behaviour is nothing new for Qualcomm, it has faced already faced hefty fines in Korea, Taiwan and Europe, this legal work is bread and butter for Qualcomm. This is a company which has an army of lawyers and seemingly specialises as much in the legal world as the technology one. Qualcomm will fight this ruling to the dying breath, as while a fine is certainly unattractive, the decision fundamentally undermines the business model which has brought billions to the firm.

Intel reduced to using MediaTek modems for 5G PCs

Remember when Intel was Apple’s 5G secret weapon to break Qualcomm’s modem stranglehold? Well, now not so much.

It turns out Intel can’t even cobble together a modem for its own products and has been reduced to calling on the help of MediaTek to bring 5G to PCs containing its chips. The resulting effort is, of course, being positioned as ‘a 5G solution’, which long-time Intel partners Dell and HP will be dutifully whacking into some of their laptops when it becomes available.

“5G is poised to unleash a new level of computing and connectivity that will transform the way we interact with the world,” proclaimed Gregory Bryant, GM of Intel’s Client Computing Group. “This partnership with MediaTek brings together industry leaders with deep engineering, system integration and connectivity expertise to deliver 5G experiences on the next generation of the world’s best PCs.”

Note the uncharacteristic absence of superlatives in that otherwise by-the-book canned quote. That’s because everyone knows Qualcomm is the 5G modem leader, even Apple. Relations between Qualcomm and intel are presumably strained since the latter tried to help Apple strong-arm the former and as a result Intel partners get an inferior modem in their 5G solutions.

“Our 5G modem for PCs, developed in partnership with Intel, is integral to making 5G accessible and available across home and mobile platforms,” said MediaTek President Joe Chen. “5G will usher in the next era of PC experiences, and working with Intel, an industry leader in computing, highlights MediaTek’s expertise in designing 5G technology for global markets.”

Does it really though, Joe? Anyway, the extent to which there will be any demand for laptops with built-in 5G built in remains to be seen. With tethering now so easy, it’s hard to see why anyone would pay a premium for any kind of embedded modem in their lappy, let alone a 5G one. But it would have looked bad for Intel to not even give it a go, and that’s what this announcement seems to be about, as much as anything else.

Apple eyeing up $1bn Intel smartphone chip purchase – sources

Reports emerged about Apple’s interest in Intel’s smartphone modem business a few weeks back, and now the rumour mill is back up-and-running as more sources suggest conversations.

According to The Washington Post, a deal worth $1 billion, including various patents and staff, is entering advanced talks. Apple has always been a business which wants to control its ecosystem and such a deal would take it one step closer to developing critical components for its devices.

Although the Intel smartphone business unit has been viewed as somewhat of a failure in recent years, it is certainly more developed than Apple’s in-house capabilities. This is an area which is a significant focus for Apple and incorporating the Intel smartphone business into its own operations could help save it years of development work.

This is of course not the first push into the semiconductor world by Apple. Not only has it announced plans to open a 1,200-strong research facility in San Diego, but it effectively ended its relationship with GPU firm Imagination Technologies in 2017. Apple said it would begin to phase out Imagination Technologies in favour of its own GPU components.

For Apple, this seems like a logical move considering the squeeze which is being placed on smartphone manufacturers worldwide. There are several reasons smartphone shipments are declining year-on-year, but the increasing price is certainly a powerful factor.

The iPhone has consistently underpinned profits at Apple, though the global slowdown and challenge to market share from Chinese brands threaten this. Apple is regularly being undercut by rivals, while entry into new markets such as India has been challenging because of the price of devices. Owning more elements of the supply chain, especially components, can help the iLeader reduce the price of handsets and become more competitive in the era of innovation mediocrity.

This is also a slight change in mentality when it comes to Apple’s acquisition strategy. Rarely does the iChief go for the big-ticket acquisitions, preferring to swallow up smaller providers in pursuit of innovation, but it does appear context is ruling above in this instance, assuming the reports are true of course.

For Intel, this would appear to be a very satisfactory exit from a challenging segment. Although the team has always had ambitions in the smartphone segment, it has never been able to make it work. The unit has consistently undermined profits and recent R&D efforts have focused on 5G in other device segments. This transaction would appear to be a win-win for both parties.

US tech companies reportedly exploit loopholes to work with Huawei

The US government seems to be losing its battle to suffocate Huawei as its own companies look for ways to keep doing business with it.

This is according to the New York Times, which has spoken to no less than four people who reckon they know what they’re talking about on this matter. They say US companies including Intel and Micron have started selling stuff to Huawei again on the grounds that the products weren’t manufactured in the US.

This is just the latest example of the confusion and contradictions created by trying to ban trade with large multinational companies in the era of globalisation. Yesterday we reported on courier firm FedEx suing the US government for putting undue burden on them to vet every package they handle in case it’s contaminated by and Huaweiness.

The NYT piece sheds light on the Byzantine complexity of the rules being arbitrarily imposed on doing business with Huawei. The ‘entity list’ kept by the Department of Commerce seems to be very badly thought out and implemented and seems to make very little allowing for the difficulties it creates for American companies.

At the core of the problem is the use of trade policy to augment political strategy. The Trump administration essentially seems to be using this entity list to brow-beat China into making concessions on things like trade tariffs, currency manipulation, etc. It might end up being quite effective but US companies are being asked to take on the burden of enforcement, which is both burdensome and costly. Some, it seems, are disinclined to play ball.

Apple said to be sniffing around Intel’s modem business

Having recently ditched Intel’s modem business like a bad habit, gadget giant Apple is reportedly now thinking of buying it.

The rumour comes courtesy of The Information, which says it got the scoop from no less than four unnamed people who we’re told have been briefed on the discussions between Apple and Intel. Specifically Apple is said to be interested in Intel’s German modem operations, which is where much of the 5G R7D will have taken place.

Intel found itself as an unwitting pawn in Apple’s legal battle of will with mobile chip giant Qualcomm. Apple wasn’t happy with what Qualcomm was charging for its modems and took to the courts to do something about it. This was always just a form of negotiation, a crucial part of which was Apple’s insistence that it could just walk away from Qualcomm if it didn’t lower its prices.

The problem with this is that there are very few 5G modem players in town and even fewer that aren’t affiliated to a smartphone competitor of Apple’s. One of those was supposed to Intel, which found itself constantly defending its ability to deliver a competitive 5G modem in the face of understandable scepticism from the industry and, increasingly, from Apple itself.

Eventually the Emperor was revealed to be naked and Apple was forced to settle with Qualcomm once it became clear Intel wasn’t able to deliver. Intel wasted little time in throwing in the towel entirely on 5G modems once their only customer had ditched them and promptly retreated into the shadows, vaguely muttering about IoT.

But that doesn’t mean its efforts to deliver a 5G modem were entirely wasted. Through acquisition and organic R&D Intel must have picked up a thing or two about delivering 5G radio over the years. While Apple is forced in the mid term to rely on the loathed Qualcomm, it ultimately aspires to modem self-reliance. Since Intel’s 5G unit is presumably available at a knock-down price following its public humiliation it wouldn’t be at all surprising to see Apple snap it up, if only for a laugh.

US supply ban threatens to cripple Huawei’s global business

Another day, another escalation as Google heads a stampede of US companies apparently refusing to do business with Huawei.

As escalations go, however, this is a pretty big one. Reuters was the first report that Google has suspended some business with Huawei in response to the company being put on the US ‘entity list’, which means US companies need explicit permission from the US state before they’re allowed to sell anything to them. It seems that permission has been denied.

For Google this means denying access to those bits of Android Google licenses – mainly the Play Store and Google’s own mobile products such as the Gmail and Maps apps. Huawei can still access the core Android operating system as that has an open source license but, as companies such as Amazon have discovered, that’s pretty useless without all the other Google goodies.

We recently wrote that Huawei’s addition to the entity list is the most significant consequence of Trump’s executive order and here we have an immediate illustration of that. It looks like pretty much all other US companies are also rushing to comply with the new regulations, with Bloomberg reporting that Qualcomm and Intel are among others cutting of business with Huawei and others will presumably follow. Nikkei even reckons German chip-maker Infineon has joined the stampede.

Huawei already has an extensive chip-making operation of its own, so arguably it can cope without the likes of Qualcomm, but what about the millions of other bits and bobs that get crammed into a smartphone such as screens, cameras, memory, sensors, etc? A lot of these could be supplied by non-US companies like Samsung and, of course, Chinese ones, but there must surely be some areas in which Huawei is entirely reliant on the US supply chain.

But Google’s licensed mobile products and services are unique. An Android phone that doesn’t provide access to the Play store is massively diminished in its utility to the end user and Google Maps is the market leader. Google also has a near monopoly with YouTube and millions of people are reliant on things like Gmail, Google Pay, Play Movies. When there are so many great alternative Android smartphone vendors, why would anyone now buy a de-featured Huawei one?

In response to these reports Android moved to stress that it will continue to support existing Huawei Android phones in the following tweet.

Meanwhile Huawei issued the following statement. “Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry.

“Huawei will continue to provide security updates and after sales services to all existing Huawei and Honor smartphone and tablet products covering those have been sold or still in stock globally. We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally.”

Huawei has reportedly been working on its own smartphone OS in anticipation of this sort of thing happening but, as Microsoft, Samsung and others have found, there seems to be little public appetite for alternative to Android and iOS. Huawei may be able to sell a proprietary platform in China, where the Play Store is restricted anyway, but internationally this move will surely see Huawei smartphone sales fall off a cliff.

“If the US ban is permanent, we predict Huawei’s global smartphone shipments will tumble -25% in 2019,” Neil Mawston of Strategy Analytics told Telecoms.com. “If Huawei cannot offer Android’s wildly popular apps, like Maps or Gmail, Huawei’s smartphone demand outside China will collapse.

“If the US ban is temporary, and lifted within weeks, Huawei’s global smartphone growth will return to positive growth fairly swiftly. Huawei offers good smartphone models at decent prices through an extensive retail network, and it should recover reasonably well if it is allowed to compete.”

“We still don’t have a clear understanding of what Google has told Huawei and what elements of the Android operating system may be restricted, so it remains unclear what the ramifications will be,” said Ben Wood of CCS Insight. “However, any disruption in getting updates to the software or the associated applications would have considerable implications for Huawei’s consumer device business.”

There have been very few official statements on the matter from US companies, so Wood is right to tread carefully at this stage, but it’s hard to see this news as anything other than catastrophic for Huawei. Its consumer business, which is the most successful unit in the company, relies largely on Android to run its products and will surely be severely diminished by the Google move.

And there’s no reason to assume the damage will be contained there. Last year Huawei’s contemporary ZTE was almost driven out of business by a ban on US companies doing business with it. Huawei may have hedged its position regarding networking components suppliers more effectively than ZTE but it will presumably suffer greatly once those companies follow suit.

Huawei is one of the biggest companies in the world and has become so in spite of being largely excluded from the US market. The Chinese state will do everything it can to support Huawei, but at least some of its US suppliers offer unique products. At the very least this puts Huawei in a weak negotiating position with potential replacement partners and international customers, but the implications of this latest development are potentially existential.

Apple starts to count the casualties of its poor 5G campaign

It looks like one of Apple’s most senior wireless engineers has cleared off, just days after the company lost its fight with Qualcomm.

The Information has reported that Rubén Caballero, a VP of Engineering in charge of wireless stuff at Apple, has left the building. One of its mystery sources said Caballero was ‘leading Apple’s charge into 5G’, which is especially appropriate considering his surname. Since that charge was resoundingly defeated by Qualcomm’s big guns Apple seems to have decided to discreetly disband its 5G light brigade.

As is its way Apple hasn’t offered any comment on the scoop but The Information says his work emails are bouncing back and his work phone has been disconnected so the circumstantial evidence is strong in this one. Additionally Apple Insider did a bit of sniffing around of its own and got another anonymous source to confirm Caballero’s departure.

Both stories feature a fair bit of speculation about why Caballero may have galloped off after 14 years at Apple, but to us the most likely reason for any wireless casualties at Apple must be the utter farce of its attempted collaboration with Intel. Since Intel was clearly hopelessly inadequate as a 5G modem partner, Apple CEO Tim Cook must have a pretty low opinion of any of his execs that told him otherwise.