By the fall of 2020, 5G support is likely to be a standard feature on high-end smartphones, and could even be found on a number of mid-range smartphones.
That's worth keeping in mind as well-connected Apple (AAPL - Get Report) analyst Ming-Chi Kuo reports that all three of next year's iPhones will contain 5G radios. Kuo, who previously indicated that only two of Apple's 2020 iPhones will support 5G, says that Apple's recently-announced, $1 billion deal to buy the majority of Intel's (INTC - Get Report) smartphone modem business provides it with more resources to develop 5G-capable iPhones.
Notably, Kuo also forecasts that 5G-capable Android phones costing just $249 to $349 will be available by the second half of 2020. However, he adds that these cheaper 5G phones will only support 5G in traditional, sub-6GHz, spectrum bands, and won't support high-frequency, millimeter-wave (mmWave) bands that can enable very high transmission speeds over short distances.
And following a number of reports stating that Apple is working on an augmented reality (AR) headset, Kuo speculates that offering more 5G phones "could benefit Apple's AR ecosystem." 5G supporters have long argued that both the technology's low latency -- that is, the minimum amount of time needed for a bit of data to get from one point to another -- and superior capacity/transmission speeds makes it a good fit for AR and VR applications.
Given the time and resources needed to develop a 5G modem that's also backwards-compatible with older cellular technologies, and given that Apple's April patent settlement with Qualcomm (QCOM - Get Report) is accompanied by a "multi-year chipset supply agreement," it's widely expected that Apple's 2020 iPhones will feature Qualcomm 5G modems. Qualcomm's Snapdragon X55 5G modem, which was unveiled in February and is expected to start appearing in commercial devices in late 2019, is a possibility.
Last week, after the Intel deal was announced, Reuters reported that Apple plans to use Qualcomm's modems in 2020, but "wants to have an internally developed 5G modem technology ready for use in some of its products by 2021." It's worth noting here that in addition to 5G iPhones, Apple is likely to eventually launch 5G-capable iPads and Apple Watches. In addition, one unnamed "chip industry veteran" talking with Reuters says that Apple is likely to continue using Qualcomm's modems in flagship iPhone models even if it starts using its own modems in cheaper and older iPhones.
Regardless of how Qualcomm's relationship with Apple evolves as Apple develops its own modems, Qualcomm is likely to have its hands full in the coming years supplying 5G modems to Android OEMs. During the company's April earnings call, President Cristiano Amon said that Qualcomm had about 75 5G design wins. That's up from the 30-plus design wins Qualcomm reported having as of January for devices featuring its Snapdragon 855 processor and first-gen 5G modem (the Snapdragon X50).
As 5G network rollouts commence in earnest and the cost of adding 5G radios to phones drops, Qualcomm's design win count should steadily rise. In late February, the company announced that commercial devices featuring an upcoming system-on-chip (SoC) that has both a Snapdragon processor and 5G modem are expected in the first half of 2020. It wouldn't be surprising if some of Samsung's (SSNLF) Galaxy S11 phones contain the SoC.
Qualcomm has also been investing heavily in developing 5G RF front-end chips that work with its modems, and has argued that its ability to offer end-to-end 5G radio solutions that extend from a phone's modem to its antennas is a competitive strength, given how 5G front-ends rely on modem intelligence to optimize their performance. Amon said in April that "the absolute majority" of the 75 or so 5G modem design wins Qualcomm has included RF front-end content.
However, given how it stands to substantially increase the amount of RF content going inside of a phone, 5G should also present large opportunities for the RF front-end market's historical leaders, such as Skyworks (SWKS - Get Report) , Broadcom (AVGO - Get Report) and Qorvo (QRVO - Get Report) . In a June report, Kuo indicated that whereas Apple's non-5G iPhones have contained just three RF power amplifier modules for sub-6GHz bands, its 2020 5G iPhones will have nine of them, thanks to the presence of six Broadcom 5G modules. Though not mentioned in the report, it wouldn't be surprising if Qualcomm supplied the phones' mmWave modules.
To sum it up, while 5G is for now a niche technology that's only supported by a handful of costly phones, it could be deployed within mass-market phones next year on a larger scale than many expect, something that in turn would be good news for a slew of chip suppliers (and indirectly, benefit a host of other firms). Kuo's latest report on Apple's 2020 iPhone plans is just the latest sign pointing in this direction.
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