Intel brings forward launch of 5G modem in bid to silence doubters

Apple’s decision to go all-in on Intel modems comes with a lot of pressure, so Intel is desperate to convince us it’s up to the task.

A week ago reports appeared to confirm that Apple’s first 5G phones will come in 2020 and will exclusively use Intel modems. Telecoms.com was among the commentators asking whether or not this would turn out to be a rash decision by Apple, with rival Qualcomm expected to be ahead in the 5G modem race.

Intel seems to have taken this scepticism as a personal challenge and has consequently announced it will now be launching it more than half a year sooner than previously thought. The Intel XM 8160 5G modem will now be released into the wild in the second half of 2019, although there’s nothing in the announcement to indicate it will power an iPhone that soon, with the September 2020 models still the likely recipients.

In fact Intel says the earliest you will see it in devices is in the first half of 2020, which does beg the question of whether this ‘bringing forward’ of the launch is purely cosmetic. Could Intel have merely tweaked the definition of ‘launch’ to allow for some kind of meaningless soft-launch six months earlier. Maybe Qualcomm will retaliate with a similar move.

“Intel’s new XMM 8160 5G modem provides the ideal solution to support large volumes for scaling across multiple device categories to coincide with broad 5G deployments” said Cormac Conroy, GM of Intel’s Communication and Devices Group. “We are seeing great demand for the advanced feature set of the XMM 8160, such that we made a strategic decision to pull in the launch of this modem by half a year to deliver a leading 5G solution.”

The fact that the XMM 8160 is ‘multimode’, supporting 5G NR in SA and NSA modes across multiple frequencies, as well as legacy wireless standards is something Intel is keen to flag up. So much so it did a special diagram.

The Intel XMM 8160 5G modem will offer very clear improvements in power, size and scalability in a package that will be smaller than a U.S. penny. It will be released in the second half of 2019, and it will support the new standard for 5G New Radio (NR) standalone (SA) and non-standalone (NSA) modes as well as 4G, 3G and 2G legacy radios in a single chipset. (Credit: Intel Corporation)

Apple reportedly plans to use Intel 5G modem in 2020, but will it be any good?

Apple has boxed itself into a corner by going to war with Qualcomm, so a lot rides on the competitiveness of Intel’s 5G modem.

Fast Company has reported that Apple intends to use the Intel 8161 5G modem in its 2020 iPhones as part of its already-known strategy of switching to Intel as its sole provider of modems. This move seems to be largely driven by Apple’s dispute with Qualcomm over how much it charges for its chips.

When large companies declare legal war on each other the dispute usually metastasises as their respective legal teams search for further dirt they can use as leverage in the ongoing negotiations. These things usually conclude in an out-of-court settlement, the terms of which are largely determined by the relative legal strength of the respective positions.

The more likely one party is to win a court case, the stronger its position in the pre-case negotiation, which is why Qualcomm has been so keen to prove that Apple committed industrial espionage in sharing Qualcomm trade secrets with Intel in order to help it produce better modems.

While Qualcomm’s most recent court filing broadly outlines fresh allegations resulting from the discovery process, conversations we had at its recent event in Hong Kong suggested Qualcomm has got hold of emails that prove the alleged passing on of protected intellectual property took place.

If Apple did indeed offer Intel a helping hand, something that Intel denies, then the clear inference is that Intel’s modems were of insufficient quality without cheating. A worst case scenario might be that the 5G modems Apple apparently intends to use would be declared illegal, but even if that doesn’t happen there will be questions over the 5G performance of those iPhones versus phones running Qualcomm modems.

So, assuming this rumour is accurate, a hell of a lot is riding on those first Intel 5G modems. If they’re rubbish then not only will that be a direct competitive win for Qualcomm, but the sales and reputation of the iPhone are likely to suffer too. In its desire to dominate its suppliers Apple is forcing itself to make some technology choices that may be far more costly than any money saved on components.

Intel triggered into joining Qualcomm Apple spat

Qualcomm has accused Intel of cheating at modems with Apple’s help, but Intel’s weak public riposte is unlikely to sway much opinion in its favour.

Judging by the general quality of their press releases all three of the companies involved in this spat refuse to issue a single public utterance until every syllable has been pored over by battalions of lawyers. As a consequence, when they decide to slag each other off via the media the result falls pretty far short of Wildean in its wit.

To be fair to Qualcomm, its latest allegations weren’t strictly public, although you have to wonder what the source of the court filing leak that resulted in the rest of the world knowing about it was. Essentially Qualcomm is questioning how Apple was able to replace its modems with Intel ones in the latest iPhones and figured it must have given Intel trade secrets to ensure its modems were up to the job.

Intel’s General Counsel Steven Rodgers posted a riposte entitled ‘Qualcomm’s Rhetoric Pierced’, which promised all kinds of rebuttals, refutations and rebukes but instead delivered a disappointingly generic whinge that amounted to ‘how dare you?’ It started fairly promisingly with a round up of all the fines Qualcomm has been hit with over the past couple of years for violating competition laws.

But then it degenerated into a general purpose moan about how unfair the allegations are when everyone at Intel works really hard, actually. “We are proud of our engineers and employees who bring the world’s best technology solutions to market through hard work, sweat, risk-taking and great ideas,” pouted Rodgers. “Every day, we push the boundaries of computing and communication technologies. And, the proof is in the pudding: Last year, the U.S. Patent Office awarded more patents to Intel than to Qualcomm.”

The correct form of the proverb is ‘the proof of the pudding is in the eating’, but if Intel chooses to keep its patents inside some form of dessert, who are we to judge? “For the most part, we have chosen, and will continue to choose, to respond to Qualcomm’s statements in court, not in public,” said Rogers, showing the acute judgment that you would expect of a senior Lawyer. Qualcomm has yet to publicly respond.

Samsung claims first 3GPP-compliant 5G modem

Korean electronics giant Samsung reckons it has edged ahead of Qualcomm in the 5G modem race.

The Exynos Modem 5100 claims to be ‘the industry’s first 5G modem that is fully compatible with 3GPP Release 15’. Qualcomm announced its X50 5G modem some time ago and seemed to have an early monopoly on 5G chips. But with Apple apparently making it clear it won’t be using Qualcomm 5G chips there is a stronger incentive than ever for its competitors to catch up.

“Samsung’s leadership in communication technologies and market-proven knowledge allowed us to develop the industry’s first 5G modem, the Exynos Modem 5100, which fully complies with the latest 3GPP standards,” said Dr. Inyup Kang, president and head of System LSI Business at Samsung Electronics. “As the industry prepares the shift toward 5G, Samsung will continue to drive the growth of innovative ideas and new services in mobile applications and other emerging industries.”

The chip is manufactured on the 10nm process and Samsung has the advantage of owning its own semiconductor fabs. It supports both mmWave and sub-6 GHz spectrum as well as all the legacy wireless technologies. Samsung says it has completed some testing, but doesn’t seem to have released the modem into the wild yet.

Qualcomm claims 5G NR mmWave antenna breakthrough

A new set of antenna modules announced by Qualcomm promise to bring the power of millimetre wave to devices soon.

The catchily-named Qualcomm QTM052 mmWave antenna module family is designed to join forces with the Snapdragon X50 modem to enable smartphones, tablets etc to live the 5G dream. Qualcomm also launched the QPM56xx sub-6 GHz RF module family to offer devices the use of a full range of 5G spectrum.

“Today’s announcement of the first commercial 5G NR mmWave antenna modules and sub-6 GHz RF modules for smartphones and other mobile devices represents a major milestone for the mobile industry,” said Qualcomm President Cristiano Amon. “Qualcomm Technologies’ early investment in 5G has allowed us to deliver to the industry a working mobile mmWave solution that was previously thought unattainable, as well as a fully-integrated sub-6 GHz RF solution.

“Now, these type of modem-to-antenna solutions, spanning both mmWave and sub-6 spectrum bands, make mobile 5G networks and devices, especially smartphones, ready for large scale commercialization. With 5G, consumers can expect gigabit-class Internet speeds with unprecedented responsiveness in the palm of their hands, which stand to revolutionize the mobile experience.”

The physics of these chips seems to be where the biggest breakthroughs occurred, specifically their size and thermal properties. Making mmWave chips viable in the very tight physical environment of the smartphone is a significant challenge and chip analyst Charlie Demerjian reckons this launch puts Qualcomm very much in the 5G driving seat.

Qualcomm QTM052 cent

Qualcomm claims world’s first 2 Gbps LTE modem

Among the final flurry of announcements to come from Qualcomm’s big 5G day was, curiously enough, a new 4G modem.

The Snapdragon X24 modem claims to be the first to offer 2 gigabits per second throughput, the first to be made on the 7nm manufacturing process (which enable it to do more with less silicon), and the first to support 7x carrier aggregation. The latter allows seven chunks of spectrum to be used in parallel to allow the aforementioned throughput awesomeness.

“As the world’s first announced Gigabit LTE modem to achieve speeds of up to 2 Gbps, the Snapdragon X24 LTE modem sets a major mobile industry milestone, designed to provide enhanced mobile broadband and deliver an extremely important gigabit coverage layer for commercial 5G networks and mobile devices that are expected to start launching in 2019,” said Serge Willenegger, GM of 4G/5G and Industrial IOT at Qualcomm.

“Further expanding on the use of 4×4 and LAA capability, the Snapdragon X24 packs a powerful array of the most advanced 4G LTE technologies commercially available, helping mobile operators to fully mobilize their spectrum assets and maximize the capacity of their Gigabit LTE networks, and mobile device makers to offer consumers a tangible glimpse of our 5G future.”

This was introduced to the assembled commentators in San Diego last week, but we were required to stay silent on the matter until today for some reason. It serves as a timely reminder of several home truths amid the 5G fervor, as Willeneger alluded to. LTE isn’t going anywhere; it will be the primary vector for mobile data for several years yet and even when 5G starts to ramp up LTE will be the fallback technology on the frequent occasions when you’re out of range of a 5G cell, or a leaf gets in the way of the signal or whatever.

It also serves as a reminder that increased speeds are the least exciting part of 5G. 4G is already able to exceed the speeds most people will ever need on mobile devices, and things like capacity, low-latency, massive IoT, etc are more useful innovations. If the X24 performs as advertised it’s likely to be appearing in mobile devices for many years to come.

Apart from the X24, Qualcomm had kept three more announcements up its sleeve until today. One is a new software development kit designed to support the commercialisation of IoT. And then there’s the introduction of Qualcomm Wireless Edge Services, which again is aimed at the IoT ecosystem but this time with the aim of helping with the provision, connection and management of IoT devices. The last PR just reflected on the 5G day and summarised all the good things Qualcomm is doing in the wide, wide world of 5G.

As we’ve written previously this whole exercise seems to have been designed to not just demonstrate Qualcomm’s 5G modem leadership, but also to show what a good job it’s doing of diversifying into the other opportunities expected to be created by 5G, such as IoT, VR and connected cars. It’s especially important for Qualcomm’s current senior management that its investors see this as evidence of how their interests would be best served by keeping the company free from the clutches of Broadcom.

Qualcomm pleads for investor patience as it rejects improved Broadcom bid

The awkward courtship continues but it’s getting more difficult for Qualcomm to refuse Broadcom’s advances.

When Broadcom offered an unsolicited $70 per share for Qualcomm back in November last year we were unconvinced by the move, not least because it seemed far too low. Earlier this week Broadcom upped its bid to $82 per share, which we had previously speculated might be a tempting level for Qualcomm investors.

Nonetheless the Qualcomm board has rejected the revised bid on the grounds that it still undervalues the company and also that it fails to offer enough protection in the likely event that even if Qualcomm accepted the bid, it would fail to get regulatory approval. But in apparent acknowledgement of how much more tempting some investors might find this new bid, the Qualcomm board has offered to meet Broadcom to see if an agreement can be reached.

It’s hard to work out precisely where the balance of power is in this process now. The Qualcomm board clearly doesn’t fancy working under Broadcom but, as a public company, it has to put the financial interests of its shareholders ahead of its personal preferences. This essentially comes down to persuading investors that they’re likely to get a better return if they allow Qualcomm to go about its business independently.

Qualcomm’s shares are currently trading at around $63 which, considering there’s an $82 per share offer on the table, gives an indication of how likely people think Broadcom’s hostile takeover strategy is to succeed. Nonetheless it’s incumbent on Qualcomm to show how it’s going to go about increasing the share price by twenty buck or so in the mid-term future.

Ultimately this comes down to two things: 5G and diversification. Qualcomm reckons it’s a year or two ahead of the chasing pack when it comes to 5G modem tech. Earlier this week it hosted a big 5G event for journalists, analysts, etc at its HQ in San Diego with the precise aim of emphasising how much its kicking ass at 5G.

Telecoms.com attended and got a distinct sense of how quietly confident Qualcomm is that, initially at least, it will be the only game in town for 5G-enabled devices. They expect the first of these to arrive around this time next year and, while there will be minimal network support for such things, the associated publicity is likely to offer a nice bit of momentum for all involved.

With that in mind Qualcomm made a couple of announcements at the event regarding industry support for its X50 5G modem, which will be the what connects these first 5G devices. A bunch of operators, covering most of the biggies, have all said they’re using the X50 for over-the-air trials on various 5G spectrum. Additionally a bunch of device OEMs (all of them bar Apple, Samsung and Huawei) have committed to make 5G devices running the X50. There was also an announcement earlier in the week about Nokia and Qualcomm enjoying 5G frolics together.

Talking of Apple, one of the significant downside risks to Qualcomm stock highlighted in this Seeking Alpha analysis is the prospect of Apple ditching Qualcomm entirely as a supplier, as rumoured earlier this week. Whether Apple will feel that way in a few years, when 5G is fully underway, remains to be seen, but that remains a significant threat in the short term. Apple is, of course, in the middle of fraught negotiations with Qualcomm and it’s probably not a coincidence that this story was leaked at such a sensitive time for Qualcomm.

There is some speculation, in fact, that Apple would be pretty happy if Broadcom did acquire Qualcomm since that would significantly reduce the number of component suppliers it has to deal with and increase the prospect of bulk discounts and other bits of supply-chain fun. The supply-chain is Apple CEO Tim Cook’s forte and he’s shown himself to be pretty ruthless when it comes to protecting Apple’s hefty margins.

In the long term, the best way for Qualcomm to protect itself from the likes of Apple is to diversify its product offering away from smartphone modems. Over in San Diego we were shown some of the other stuff Qualcomm is up to in areas such as audio, gaming, AI and Windows laptops. The clear aim was to demonstrate that there’s a lot more to Qualcomm chips than just iPhones.

What this all comes down to is Qualcomm saying to its shareholders that it has a bright future as an independent chip giant, but that might take a few years to play out and you’ll never know if you allow us to be bought by Broadcom. Of course Broadcom might to a great job of allowing Qualcomm to realise all this potential as a semi-autonomous business unit, but you just never know. We’ve copied the recent M&A correspondence between the two companies below.

 

February 5, 2018

Board of Directors

Qualcomm Incorporated

5775 Morehouse Drive

San Diego, CA 92121

 

Dear Members of the Board of Directors:

Broadcom remains committed to acquiring Qualcomm, and we write to present to you our best and final offer.

Broadcom is prepared to acquire Qualcomm for an aggregate of $82.00 per Qualcomm share, consisting of $60.00 in cash and the remainder in Broadcom shares.

Broadcom is prepared to pay a “ticking fee” providing for an increase in the cash consideration payable to Qualcomm stockholders if the transaction is not consummated by the one-year anniversary of entering into a definitive agreement.

Broadcom is prepared to pay to Qualcomm a significant “reverse termination fee” in an amount appropriate for a transaction of this size in the unlikely event we are unable to obtain required regulatory approvals.

Broadcom is willing to agree to a regulatory efforts provision that is at least as favorable as the one Qualcomm provided to NXP.

Broadcom has fully negotiated commitment papers with its financing sources in an amount sufficient to fully fund the transaction.

The Broadcom Board is prepared to invite Paul Jacobs and one other current Qualcomm director to join the combined company’s board upon completion of the transaction.

Our offer is premised on the following conditions:

Either Qualcomm acquiring NXP on the currently disclosed terms of $110 per NXP share or the transaction being terminated.

Qualcomm not delaying or adjourning its annual meeting past March 6, 2018.

Broadcom’s offer represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm’s unaffected 30-day volume-weighted average price.

Our proposal includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company’s strategic and operational advantages. Broadcom’s track record demonstrates our ability to consistently accelerate share price appreciation following acquisitions and indicates a substantial likelihood that we will exceed our synergies expectations.

This proposal to acquire Qualcomm is extremely compelling compared to any other alternative available to Qualcomm, with or without the acquisition of NXP, and we believe any responsible board would engage with us, without further delay, to turn this proposal into an executed definitive agreement.  We continue to hope you choose to engage with us for the benefit of your stockholders.  However, we will withdraw this proposal and cease our pursuit of Qualcomm immediately following your upcoming annual meeting unless we have entered into a definitive agreement or the Broadcom-nominated slate is elected.

This letter does not constitute a binding obligation or commitment of either company to proceed with any transaction.  No such obligations will in any event be imposed on either party unless and until a mutually acceptable definitive agreement is formally entered into by both parties.

Sincerely,

Hock Tan

President and Chief Executive Officer

 

February 8, 2018

Mr. Hock Tan

President and Chief Executive Officer

Broadcom Limited

1 Yishun Avenue 7

Singapore 768923

 

Dear Mr. Tan:

I am writing on behalf of the Board of Directors of Qualcomm Incorporated.  The Board has reviewed your February 5, 2018 letter proposing to acquire Qualcomm for a combination of $60.00 in cash and $22.00 in Broadcom shares per Qualcomm share, as well as the materials filed publicly in connection with that letter.  As presented, your proposal raises more questions than it answers.

The Board has unanimously determined that your amended offer materially undervalues Qualcomm and falls well short of the firm regulatory commitment the Board would demand given the significant downside risk of a failed transaction.  However, the Board is committed to exploring all options for maximizing shareholder value, and so we would be prepared to meet with you to allow you to explain how you would attempt to bridge these gaps in both value and deal certainty and to better understand the significant issues that remain unaddressed in your proposal.

In the meeting, we would expect that you will be prepared to provide clear, specific and detailed answers to the questions below.

What is the true highest price at which you would be prepared to acquire Qualcomm?  Is it $82 per share or is it higher?  Your current proposal is inadequate as it materially undervalues Qualcomm.  Your proposal ascribes no value to our accretive NXP acquisition, no value for the expected resolution of our current licensing disputes and no value for the significant opportunity in 5G.  Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector.

Is Broadcom willing to commit to take whatever actions are necessary to ensure the proposed transaction closes?  This is extremely important to value preservation for our shareholders.  The differences in our business models expose the Company to significant customer and licensee risk between signing and closing an agreement.  It is indisputable that there are significant regulatory hurdles in your proposed transaction.  It is also indisputable that if Qualcomm entered into a merger agreement and, after an extended regulatory review period the transaction did not close, Qualcomm would be enormously and irreparably damaged.  If you are not willing to agree to do whatever is necessary to ensure a transaction closes, we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm’s shareholders.

We have a number of other important questions, which we can discuss at our meeting.  We will reach out to you to schedule the meeting.

 

Sincerely,

Paul E. Jacobs

Chairman of the Board

cc:        Steve Mollenkopf

Chief Executive Officer

Qualcomm tries to make friends and influence people in China

Embattled chip giant Qualcomm is so keen to acquire new allies it has held a special event in China to court its smartphone vendors.

In common with the rest of the industry it’s all about 5G this year, and for the foreseeable future, for Qualcomm. We’re already all too aware how aroused telcos’ marketing departments are at the prospect of slapping 5G on everything, on the assumption that they’ll flog loads more of it as a consequence. This trend is likely to be most conspicuous among smartphone vendors.

A lot of these are Chinese, so it makes sense for Qualcomm to make a bee-line for them, especially since the only other two of note are Samsung, which has an ambivalent chip relationship with Qualcomm, and Apple, which seems to actively despise Qualcomm. The result is the ‘5G Pioneer Initiative’, which involves Oppo, Vivo, Xiaomi, Lenovo, ZTE and Wingtech. What, no Huawei?

“5G will bring massive new opportunities to the mobile industry, and we are excited to work with these manufacturers on this 5G Pioneer Initiative,” said Cristiano Amon, president of Qualcomm. “Qualcomm Technologies has close relationships within China’s mobile and semiconductor ecosystem, and we’ll continue to work with this ecosystem to drive innovation as we move from the 3G/4G era to the 5G era.” Everyone else said stuff too, but it was more of the same. Suffice it to say they’re all pleased, excited and committed.

On top of that Lenovo, Oppo, Vivo and Xiaomi all signed a memorandum of understanding (where’s the photo? How do we know it happened unless there’s a photo of loads of people in suits standing behind a desk with a bit of paper on it?) for the multi-year purchase of RF front-end solutions.

Apparently all this MoU amounts to is a statement of intent to purchase some gear from Qualcomm, but with no obligations, so you have to wonder what the point of it is. Our guess would be that this is some bullish messaging directed at investors currently being courted by Broadcom as part of its hostile takeover bid. Lots of spokespeople said things, again.