By Stephen Nellis
(Reuters) – Qualcomm Inc on Tuesday said it will produce chips for 5G telecommunications networking gear, marking the first entry by a major American technology company into a market dominated by European and Chinese firms.
San Diego-based Qualcomm is already the largest supplier of chips for mobile phones, including the modem chips that connect handsets to newer 5G wireless data networks capable of faster speeds than LTE networks. But the market for the 5G base stations and other infrastructure purchased by telecommunications carriers has been dominated by players such as Nokia, Ericsson and, before the U.S. government moved to cut off its ability to secure semiconductors, Huawei Technologies Co Ltd [HWT.UL].
Qualcomm does not plan to challenge those players directly. Instead, it is aiming to potentially become a supplier of chips to those companies and others as the technology in 5G base stations shifts.
Today, 5G base stations are much like early cellular phones, where a single player designs the entire device from top to bottom, ordering up custom chips and writing custom software. But the smart phone sector eventually exploded when Qualcomm began supplying industry standard phone processor chips and Google’s Android operating system enabled hundreds of phone makers to enter the market by basing their devices on the Qulacomm-Android combination.
Cristiano Amon, Qualcomm’s president, said a similar trend is now playing out with 5G base stations, where companies like Microsoft Corp and others are working to write software that will run “virtualized” 5G base stations. Qualcomm wants to supply the chips for those stations to both existing makers and any new entrants.
“I think we have the advantage in thinking about the next generation infrastructure. We don’t have to worry about any legacy products, so we can start designing something from scratch,” Amon told Reuters in an interview.
(Reporting by Stephen Nellis in San Francisco; Editing by Andrea Ricci)