Intel has announced that it is exiting the 5G smartphone modem business, and as a consequence, it will no longer release the 5G modems that it is planning to ship to manufacturers within the second half of 2019.
Intel decided to get out of the 5G smartphone modem business after it became clear to the company that there is no way for the business segment to become profitable. While the company will no longer launch 5G modems, the American semiconductor manufacturer will still honor existing contracts for LTE modems, and the tech firm will continue to participate in the 5G network business through the development of network infrastructure.
Even though Intel attempted to accelerate the launch of its 5G modems, the tech firm is well behind the market leader Qualcomm, whose RF chipsets are already found in smartphones and hotspots available to consumers. If Intel has not exited the handset modem business, first devices with Intel-made modem will only appear in the first half of 2020, which is still at least eight months away. By that time, the updated version of Qualcomm's 5G modem, the Snapdragon X55, will likely be available to handset makers.
Furthermore, while the company planned to make its modems available to Android device makers, it seems that Intel is relying on Apple for most of its modem sales. The Cupertino-based tech giant originally had plans to replace Qualcomm chipsets with Intel-manufactured counterparts, although reports suggest that Apple does not want to entirely rely on non-Qualcomm modems due to concerns related to the production yield rates and the lack of versatility.
Apple and Qualcomm recently signed a settlement deal that resulted in the dropping of lawsuits in various courts. While the two parties have not yet fully disclosed the contents of the agreement, there is a possibility that the settlement will allow Apple to use Qualcomm's 5G patents and components, a move that could significantly impact the potential revenues that Intel may get from its 5G modems.
With Intel's withdrawal from the 5G smartphone modem market, handset makers now have fewer component makers to choose from. Device manufacturers, like Samsung Electronics and LG Electronics already sourced 5G modems from Qualcomm and incorporated them into premium devices like the Samsung Galaxy S10 5G and the LG V50 ThinQ 5G.
Another component maker that handset manufacturers may source their products from is the Taiwanese tech firm MediaTek. The company unveiled the Helio M70 in June 2018, and the product will start shipping the 5G modem to its customers later this year. This chipset offers maximum data speeds of 5Gbps over 5G networks, and the product is fabricated using the 7nm process node technology, which helps reduce the power consumption and heat production of the modem.
In the short term, Intel's decision to withdraw from the 5G smartphone modem business will negatively impact handset makers who have already included Intel's chipsets into their devices, forcing these companies to redesign the internals of their handsets. Meanwhile, in the long run, fewer semiconductor makers creating 5G modems may affect the pricing and the pace of development of these essential networking components.