The Five 5G Chipmakers

5 companies are making 5G chips: Huawei, MediaTek, Qualcomm, Samsung, and UNISOC/Ziguang Zhanrui. Apple intends to join them one day. Almost all are made at the 7 nm foundries of TSMC and Samsung. (Large chart below)

Huawei/HiSilicon only produces for their own phones, about 1/3 of the 5G market in 2020.

MediaTek has been #2 to Qualcomm in 4G, mostly with lower-priced chips. It is sampling an advanced 5G chip in January 2020.

Qualcomm has added the mid-range 765 to the premium 800 line and is pricing aggressively.

Samsung makes 5G chips for its own phones as well as Oppo. It's investing over $10 billion to increase capacity.

UNISOC/Ziguang Zhanrui, once known as Spreadtrum, has chip samples in testing. Backed by the very well-funded Tsinghua Holdings, it has the resources to win market share.

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37%/year Productivity Improvement at Telstra

Telstra "delivered 5X data growth at fixed cost by FY21." That required productivity improvement of 37%/year. Verizon estimates 40%/year. CEO Vestberg puts it another way: "Our cost per bit is 1/10th of what it was." Deutsche Telekom estimates 1/8th. None of these figures are exact, but the trend is obvious.

Wireless technology is improving at a ferocious rate. As we all know, demand for bits continually increases. The improvements in technology have generally matched the growth in traffic demand. Now that traffic growth is slowing, overcapacity is likely. 

The rough equivalence between capacity and demand is confirmed by the financial reports of Telstra, Verizon, and most other telcos. Capital spending has been flat while generally meeting demand. Speeds have gone up dramatically.

Supply and demand explain much of what's happening in telco networks. 

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Understanding Telco People

A consulting client, expanding rapidly in the cloud, asked me for advice on how to understand the culture at phone companies. In the cloud/webscale world, mistakes happen often and are fixed quickly. That's usually impossible in telecom. Networks take years to build. A fast 5G rollout is 3-4 years. 5 years or more is common. You can't turnaround quickly.

Don't underestimate the tech people in telecom. Almost all very smart and capable. Few have fancy degrees, Almost all have worked their way to the top against a thousand others. Most are lifers and have spent many years at the same company. They believe outsiders don't understand the business. They are usually right.

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Xiaomi $285 5G is Not Crazy

 A Chinese teardown of the Xiaomi Redmi K30 5G estimates the component costs at $250*, leaving almost nothing to cover assembling, distribution, support ... It will lose money on each one. Prices under $300/2000 yuan were expected by summer 2020. Xaiomi is six months ahead. It's a decent phone: 6.7", 120 Mhz screen refresh, 4 rear cameras including Sony's 64-megapixel IMX686, fast charging,sensor. It also supports 30W fast flash charging, and has a 4500 mAh battery.

Xiaomi founder, Le Jun, explains, " Today's China is an era of overcapacity." There are nine 5G phone makers in a market where it will be hard for even 4 or 5 to be profitable. Xiaomi has no choice but to find dramatic ways to break out of the pack.

The low price is probably a good idea. Since the days of the Hewlett-Packard calculators, electronics companies have often "forward-priced." Costs go down with scale and as the company advances "down the learning curve."The low price builds the volume to a point the company gets better parts prices. Low prices also build demand, for this and other Xiaomi models.

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Live 5G Phones. Basic facts

5G phone prices are down to $285!! 9 companies are selling 5G phones but the market will only allow 4 or 5 to be profitable. That's the China price, where 10M or more have already signed up. The 150 million subscribing in China next year are an enormous market. All the companies are doing what they believe they must to win market share. US & European prices are still $900 and up, as telcos go very slow on 5G.

The chart below has phone, china price, weight, number of cameras, and size for all phones shipping as of December 13. The updated master is here.

 

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Live 5G Deployments: Basic facts

Over 30 networks are actively selling 5G to consumers. About as many more carriers have told the press they are active but are really still in trials. T-Mobile US has a low-band offering it considers 5G but is slower than most 4G. I think that's a scam and don't include it. 

The latest live list is here. Below, the list from Dec 26, 2019 

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5G Funny Numbers: 10M Sign on October, only 5M Phones in November

Ten million Chinese "reserved" 5G phones in the first two weeks of October, a powerful signal of high demand. Huawei thought they could all get phones in October. But the official figures are less than 1M 5G phones in October and ~5M in November.

WTF? It could be an ordinary problem of ramping supply of a new product. It could be the official figures on phone sales are lagging reality by several weeks. 

It might also be that millions aren't following up on their reservations. In October, most 5G phones cost $700-1200. In November, prices fell to $453. Xiaomi just announced a decent 5G phone for $285 (1999 yuan,) starting to ship in January. The Chinese press actively reported the price drop, although the initial supply has been limited. Smart buyers may just be waiting.

But it's also possible the 10M figure was not right. Contrary to Western reports, the major Chinese companies do not routinely lie about things like this. 

A few years back, the Chinese figures for FTTH were hard to believe. But I checked with the chipmakers, who confirmed China was buying that many chips for FTTH.

There's enormous pressure on the telcos to "accelerate" 5G, which was supposed to stay in trials until summer, 2020. They haven't provided any details of the second half of October or of November. Maybe something is in fact wrong.

The ten million figure is prominent in the raised projections for 5G subscribers and I hope it is accurate.

 

Xiaomi Redmi 5G: $285. The explosion is here.

Xiaomi's first 2020 phone is US$200 cheaper than anything else in the world, half the price of many, and less than a third of the prices in the West. Huawei and China Mobile expected the price to fall under $300 in the summer of 2020. Shipping in January, Xiaomi has moved 6 months before anyone anticipated.

Lu Weibing of Xiaomi is seizing "a historic opportunity" to win market share for the next decade. Huawei has jumped to over 40% market share in China. The low price is a weapon against the Huawei Honor brand, Lu is

"Very confident that K30 will completely crush the V30 of friends. This product must be the turning point between the two brands. We will form a crushing trend."

The Redmi K30 5G uses the new Qualcomm Snapdragon 765G,  priced lower than the 865G in all prior Qualcomm 5G phones. While chip prices are confidential, Qualcomm has reduced the price differential between the 765G and 4G chips. The 4G version of the K30 is $230, only $55 less than the 5G. 

It's a decent phone: 6.7" screen, 64-megapixel camera, 120Hz display, and a 4500 mAh battery. When I told Jennie the specs, she asked, "When will we be able to buy it in the US?"

?$150 by the end of 2020.