There's a lot of buzz about the imminent industrywide transition to 5G wireless networks, and chip giant Intel (NASDAQ:INTC) is one of the many companies that's been quite vocal about the opportunity that this transition could represent.
Intel has a dedicated 5G landing page, for example, on which it says that "5G will transform industries from all business sectors, initiating ripples of impact that will spur market growth and the global economy -- the heart of The 5G Effect." (Yes, the company seems to be laying it on thick.)
Let's take a closer look at some ways Intel is set to profit from the 5G transition.
Over the years, Intel has established itself as a credible supplier of cellular modems. Although the vast majority of the company's modem revenue comes from sales of stand-alone modems into Apple's (NASDAQ:AAPL) iPhone product line, the company says its modem portfolio also targets "tablets, PCs, and Internet of Things (IoT) devices."
Fast Company recently reported that Apple will use Intel's first commercial 5G modem -- known as the XMM 8160 -- in its 2020 iPhone lineup. I also expect that Apple will eventually transition the cellular versions of its iPad product line to Intel 5G modems, too. (However, that opportunity is much smaller than the iPhone opportunity since iPads are much lower-volume products to begin with than iPhones, and not all iPads are sold with cellular connectivity.)
Additionally, Intel's Cormac Conroy, the general manager of the company's Communications and Devices group, told Fierce Wireless that the company's XMM 8160 is being incorporated "into a smartphone reference design, sporting an applications processor from supplied [sic] Unisoc Communications (formerly Spreadtrum)."
"Conroy said the offering would be available in the first half of 2020 and is designed to push Intel's 5G modem into the midtier portion of the smartphone market," Fierce Wireless wrote.
One area that's been delivering a lot of growth for Intel's data center group (DCG) business -- its second largest by revenue and total profits -- is sales of processors and related components to communications service providers.
Last quarter, for example, Intel reported that its revenue from communications service providers grew 30% over the same period a year ago, slightly outpacing the roughly 25.9% growth achieved by the company's overall DCG revenue. (Intel's sales into the enterprise and government segment were up just 1%, which diluted the growth that Intel saw to both communications service providers and to cloud service providers, the latter of which was up 50% year over year.)
At the company's Data Centric Innovation Summit event back in August, Intel's Dan Rodriguez, the general manager of Intel's communications infrastructure segment, claimed that the total addressable market that the company will be going after in network infrastructure will be worth $24 billion by 2022.
During that presentation, Rodriguez claimed that the company has:
... driven with our partners over 25 5G trials, and due to those trials, plus the momentum that we have on LTE networks, the design wins that we've won in 5G, Intel is tracking to the leadership position in 5G wireless infrastructure.