Intel Eyes Fab 5G Future, Not Another Mobile Mess

The semiconductor giant hopes a 5G-driven convergence between computing and communications will play into its hands.

Iain Morris, International Editor

April 13, 2017

8 Min Read
Intel Eyes Fab 5G Future, Not Another Mobile Mess

It's probably not unfair to describe Intel's previous foray into mobile territory as an epic blunder. Despite marshaling its vast R&D resources, the semiconductor giant was unable to dislodge the UK's ARM as the microprocessor designer of choice in the 4G smartphone era. Branded Atom, its processors bombed. As quietly as it could, Intel shuttered the mobile chip shop and went in search of other business.

But now the company is back with big plans for 5G, and it's been making a lot of noise about the next-generation mobile technology several years before it's even due to hit the market. Is history about to repeat itself?

Intel Corp. (Nasdaq: INTC) obviously hopes not, and perhaps with good reason. For one thing, it has effectively given up trying to compete in the application processor space. "The 4G efforts were anchored on both the application processor and the modem, and we've staked our focus now on the modem side," says Sandra Rivera, the vice president of Intel's data center group and general manager of its network platforms division.

Figure 1: On the Intel Inside Sandra Rivera, the vice president of Intel's data center group and general manager of its network platforms division, is betting on the potential of 5G. Sandra Rivera, the vice president of Intel's data center group and general manager of its network platforms division, is betting on the potential of 5G.

The fruit so far is a 5G modem that Intel claims works across a range of sub-6GHz and very high frequency bands. In case anyone has forgotten, the sub-6GHz bands are ideal for wide-area and in-building coverage, while the much higher ranges will support the very zippiest services. Both seem bound to figure in operators' 5G plans. (See Intel Readies Multi-Use 5G Modems to Compete With Qualcomm.)

Announced in January, in the run-up to this year's Mobile World Congress, the full modem is due for trials in the second half of this year and could eventually make its way into an array of end-user devices. With 5G new radio specifications due to be frozen at the end of this year, and the first standardized services arriving in 2019, Rivera expects 5G devices to start shipping in meaningful quantities come 2020. (See 3GPP Approves Plans to Fast Track 5G NR.)

Besides narrowing its focus on the components side, Intel is trying to be more gregarious. "I think we were really going it alone during that [4G] time," says Rivera. WiMax, a "4G" network technology that Intel backed, was "superior" to LTE, she insists, but didn't catch on because of Intel's isolation. "We didn't bring the rest of the industry along and align with them," she says.

In the spirit of collaboration, Intel can today point to a handful of high-profile partnerships with other 5G stakeholders. That includes tie-ups with Sweden's Ericsson AB (Nasdaq: ERIC) and Finland's Nokia Corp. (NYSE: NOK), two of the world's three biggest equipment makers (China's Huawei Technologies Co. Ltd. being the other, of course). In mid-February, Nokia was said to have completed a "pre-standards" 5G connection using a data center based on Intel architecture and what the semiconductor giant describes as its "5G mobile trial platform."

It is perhaps the computing and architectural implications of 5G that could really make it a big deal for Intel. Operators like Germany's Deutsche Telekom AG (NYSE: DT) have talked about overhauling their networks and replacing big data centers with more distributed, "front-end" facilities. Doing so would minimize latency -- the delay that occurs in sending signals over data networks -- and could open up new service possibilities. But it would mean installing a lot more computing power at the very edge of the network. And that could mean a lot more business for Intel. "We are trying to drive more computing closer to the end point," says Rivera.

Virtualization and programmability look set to be key requirements in this overhaul as operators demand greater efficiency from their networks. But the more general transition from purpose-built "black boxes" to cloud technologies could play right into Intel's hands, allowing it to shift more of its off-the-shelf CPUs (central processing units). And as it targets emerging opportunities at the network "edge," Intel should be able to draw on its experiences in the core network area. "We've been there for many years and that part of our business is actually very large, relatively speaking, in terms of the network infrastructure group," says Rivera.

Next page: More ARM wrestling ahead

More ARM wrestling ahead
It is probably still not that big, however. During a previous conversation with Light Reading, Rivera said the networking group generated about $1 billion in 2015 -- just 1.8% of Intel's overall sales that year. But the data center group in which Rivera is also involved has become vital to its interests, and a high flyer in the overall business. Last year, sales at this division were up nearly 8%, to $17.2 billion, accounting for about 29% of the total, and Intel bosses reckon opportunities outside the enterprise sector will fuel growth in future. (See A Few Minutes With Intel's Sandra Rivera.)

"Enterprise is now less than 50% of our total make-up for the data center group, and the cloud is growing great and that will continue, but… the majority of the rest of the growth for the rest of this decade in the data center alone [will come from] networking and storage, where we have very low market share today," said Brian Krzanich, Intel's CEO, during a recent earnings call (see this Seeking Alpha web page for a full transcript). "We're bringing things like SDN and NFV to those and so that's a growing and expanding TAM [total addressable market] as those markets move to Intel architecture."

Could ARM Ltd. threaten Intel's data center business in the same way Intel tried to upset ARM in mobile? Last year, French telco Orange (NYSE: FTE) flagged "white box" experiments in which it replaced x86 chips, based on Intel architecture, with ARM-based smartphone processors. Even more significantly, cloud-computing giant Microsoft Corp. (Nasdaq: MSFT) last month announced plans to use processors from ARM licensee Qualcomm Inc. (Nasdaq: QCOM) in its servers. The move augurs badly for Intel. (See Orange Plots Mass Network-as-a-Service Rollout and Microsoft, Qualcomm Bring ARM to Azure.)

Even so, loosening the semiconductor giant's tight grip on the data center market will clearly not be easy. The bigger challenge to Intel will come in the modem space. Qualcomm unveiled X50, its first 5G modem, back in October. This week it drew attention to its rivalry with Intel during a legal spat with Apple Inc. (Nasdaq: AAPL), claiming the iPhone maker tried to hide the fact that Qualcomm technology "outperformed" Intel's in iPhone 7 devices. (See Oh Snap! Qualcomm Unveils X50, Its First 5G Modem and Qualcomm Blasts Apple for Disrupting Deals in Legal Dispute.)

Want to know more about 5G? Check out our dedicated 5G content channel here on
Light Reading.

Perhaps the biggest risk, however, is simply that 5G does not arrive as speedily as Intel would like, or in the shape it desires. Rivera concedes that it will be "challenging" for operators to build a 5G business case based on revenue growth, which has eluded the industry for years. Yet one based around cost savings and efficiency may be a much harder sell to investors. Deutsche Telekom and Orange have both expressed concern about the cost of building a 5G network. Shifting IT resources to the network edge could leave operators with an eye-watering bill. And to provide the fastest speeds, telcos may need to use very high frequency bands, necessitating the costly installation of more network equipment. (See DT CTO: Costs Must Fall or 5G 'Won't Work' and The Growing Pains of 5G.)

Much of the underlying network transformation is already happening, though, as operators lay the foundations for a 5G future. "These industry shifts take anywhere from five to ten years but we are not on day one," says Rivera. US telco giant AT&T Inc. (NYSE: T), she notes, has already virtualized about a third of its network and is working toward a goal of 75% by 2020, when 5G should have landed. And Intel's network business witnessed "strong growth" last year, according to Krzanich, as telcos made investments "in anticipation of 5G." If Intel can continue selling its vision to operators and partners, this mobile story could have a much happier ending than the last.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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