Qualcomm Seeks to Kick Start 5G Services With New Phone Chip

  • Chipmaker to offer modem to help push early trials, services
  • Next generation networks to offer faster data speeds

Qualcomm Inc. announced a new mobile phone chip for forthcoming fifth generation, or 5G, phone networks aimed at speeding the introduction of that technology to overcome a lull in smartphone innovation that’s hurt growth.

The world’s first 5G modem, the Snapdragon X50, is designed to support early trials and deployments of the new technology and will enable devices to download data at up to 5 gigabits per second. Samples will be offered to prospective customers in the second-half of next year, Qualcomm chip unit head Cristiano Amon said Tuesday at a company event in Hong Kong.

The San Diego, California-based chip designer, the largest maker of semiconductors used in mobile phones, is repeating a strategy that helped it profit more than any other semiconductor company from the migration to previous generations of network technology. By being the first to offer higher-speed capabilities in its modems, Qualcomm has embedded itself in the the newest phones and connected devices, garnering the majority of industrywide sales and profits.

As the current technology, called LTE, has matured, smartphone shipment growth has slowed and chip revenue has stagnated. In the first half of this year industrywide sales of modems were $10.5 billion, down 2 percent from a year earlier, according to market researcher Strategy Analytics. Qualcomm’s slice of the market fell to 50 percent from 67 percent in the same period a year earlier. The company’s revenue is on track to decline 8 percent this year following a decline of 5 percent in 2015, according to data compiled by Bloomberg.

While most of the industry is gearing up for full commercial 5G services around 2020, some companies, such as Qualcomm, are trying to pull in the date when there will be enough demand to spur sales of new phones and equipment. While the new networks will attempt to bring higher-speed data to smartphones -- which account for the bulk of data traffic -- they’ll also include enhancements designed to allow them to connect everything from self-driving cars to surgical robots and even offer an alternative to fixed line broadband Internet services.

As an interim step, Qualcomm is offering another new modem, working on the existing LTE networks, that will allow mobile phone users to download data at up to 1 gigabit per second. The new chip will bring that capability to smartphones this year, Qualcomm said. Proof that current networks can be extended to deliver data that quickly will come shortly in Australia where some business customers on the Telstra Corp. network will be offered Netgear Inc. cellular hotspot devices that will contain Qualcomm’s X16 modem, the company said.