US chipmaker Marvell, which counts Nokia as its biggest 5G customer, has been hurt by telco spending cuts and inventory build-up.

Grizzled telecom veterans hardly need further evidence of the slump in network spending by operators that have struggled to make returns on their 5G investments so far. Results from both Ericson and Nokia, the dominant kit vendors outside China, have been a depressing read for several quarters, and challengers seem to have fared even worse. But Marvell Technology’s latest telecom figures certainly add to the gloom.

The US company is among a handful of chipmakers that design silicon for use in 5G basestation equipment. It obviously differs from Ericsson and Huawei, which produce chips only for internal consumption, by selling those 5G chips to the companies that build the networks. This distinguishing feature puts it in an even smaller group of so-called “merchant silicon” vendors. In one of the sub-sectors targeted by Marvell, the only notable players outside China are AMD, Intel, Nvidia and Qualcomm.

Including Marvell, all five offer chips for so-called Layer 1 baseband, the signal-processing activity that largely happens in server boxes (called distributed units in more newly architected networks) separate from the actual radios. But these Layer 1 baseband chips account for a tiny share of the revenues generated by AMD, Intel, Nvidia and Qualcomm. AMD and Intel are concerned mainly with PCs and data-center servers, Nvidia thrives as a monopolistic force in the market for AI chips and Qualcomm – when it is not litigating – provides the modems and application processing units that power many of the world’s smartphones.

This is not the case for Marvell, which made nearly $1.1 billion from “carrier infrastructure” sales last year, nearly a fifth of its total revenues. Unlike AMD, Nvidia and Qualcomm, it has been able to land a major deal with a Tier 1 vendor, benefiting there from the misfortunes of a rival. In 2020, after it was failed by Intel on the delivery of 5G basestation chips, Finland’s Nokia selected Marvell as a new provider of Layer 1 silicon. In the preceding year, Marvell had booked just $370 million in carrier infrastructure sales. By early 2022, annual revenues at this unit had soared to almost $908 million.

Laid low by Nokia

But the business went into reverse this year after telcos hit the spending brake. Sales plummeted 75% for the first quarter, year-over-year, to about $71.8 million, and another 72% for the recent second quarter, to $75.9 million, accounting for as little as 6% of Marvell’s overall turnover.

Today, Marvell’s heavy reliance on one customer – in a market for radio access network (RAN) equipment dominated by a few players – looks far from ideal. While Nokia appears to have gained 5G market share outside China in recent years, its performance so far in 2024 has looked worse than that of Ericsson, its big Nordic rival.

First-half sales at Nokia’s mobile networks business group were down 31% on a constant-currency basis, to about €3.5 billion (US$3.9 billion), while operating profits sank 62%, to €129 million ($143 million). On a reported basis, sales at Ericsson’s equivalent unit fell just 16%, to about 71.4 billion Swedish kronor ($7 billion). And despite that drop, Ericsson managed to grow its mobile network operating profit for the second quarter by 78%, to SEK4.8 billion ($470 million).

Nokia, of course, has suffered a major setback in the US that seems bound to affect Marvell. In December, AT&T, an operator that accounted for between 5% and 8% of all Nokia’s mobile revenues in 2023, revealed it would be tearing up its contract with the Finnish vendor and switching to Ericsson instead. Nokia had previously served about a third of AT&T’s footprint, with Ericsson equipping the rest. The decision, which will leave AT&T heavily reliant on Ericsson, comes a few years after Nokia was beaten by Samsung to a 5G contract with Verizon. All this leaves it with only T-Mobile as a Tier 1 customer in one of the world’s most profitable equipment markets.

Back to a billion

A Nokia revival, though, is probably Marvell’s best hope for a recovery at its carrier infrastructure unit. Market revenues from RAN products fell 11% last year, to about $40 billion, according to Light Reading sister company Omdia, which forecasts another decline of between 7% and 9% this year. The top five vendors accounted for all but 4.9% of those revenues, and smaller companies collectively made no advances last year. The share of Samsung, Marvell’s only other notable customer among the top five, was just 6.1% in 2023. US sanctions rule out Chinese vendors as prospective Marvell customers. Huawei, in any case, designs its own chips, as does Ericsson, relying on Intel to make them.

Marvell CEO Matt Murphy is optimistic the second half of the year will bring improvements in both carrier infrastructure and enterprise networking, another ailing division, after the depletion of inventory in North America, where telcos previously amassed stock. “The way to think about it is we’re trying to drive both of those businesses back, and we believe we have line of sight to drive both of those businesses back to about $1 billion each, call it $2 billion in aggregate, maybe $2.2 billion of run rate on an annualized basis,” he told analysts on this week’s results call.

Fortunately, while carrier infrastructure, enterprise networking and various other units had a miserable second quarter, Marvell’s data-center business nearly doubled in size, to about $881 million. Like Nvidia, although to a far lesser degree, it has benefited from demand for chips that can support various AI needs. And thanks to that growth, Marvell narrowed its quarterly loss to about $193 million, from $208 million for the year-earlier quarter. But for now, telecom remains a bad place to be.

A Huawei spokesperson highlighted that RedCap technology can reduce 5G NR module costs by 80%

Chinese vendor Huawei has been exploring a broad range of scenarios for the implementation of 5G RedCap, also known as 5G NR Light technology, beyond wireless sensors and smart wearables, a Huawei spokesperson told RCR Wireless News.

According to the spokesperson, 3GPP defines three key scenarios for RedCap: surveillance, wireless sensors and smart wearables. However, Huawei, in collaboration with operators and ecosystem partners, has been exploring additional use cases for RedCap, including smart grids, smart manufacturing, mobile Wi-Fi, smart CCTV and entry-level 5G FWA, among others. “Most verticals can benefit from RedCap technology commercialization. In our opinion, smart CCTV for city management, smart wearables for healthcare and entry-level 5G FWA are among the most promising globally. RedCap helps lower the cost of adopting 5G applications while maintaining good coverage quality and performance,” the spokesperson stated.

The spokesperson also highlighted that RedCap technology can reduce 5G NR module costs by 80%, lower power consumption by over 30% and support several 5G-native capabilities, such as large network capacity, ultra-reliable low-latency communication (uRLLC), network slicing, edge computing and 5G LAN.

When asked how 5G RedCap technology balances reduced device complexity with the need for reliable connectivity and performance, the spokesperson explained that RedCap reduces the 5G user equipment (UE) bandwidth from 100 MHz to 20 MHz and the antenna configuration from 2T4R to 1T2R or 1T1R, thus lowering both complexity and cost.

In a previous speech at MWC Shanghai 2024, Xiang Fang, vice president of Huawei’s Wireless Network Product Line, emphasized that RedCap achieves both cost and performance optimization. It reduces the cost of 5G modules by 80%, enhances reliability by a factor of 10, and increases network capacity tenfold, all while enabling more 5G-native features such as network slicing, low latency, and high-precision positioning.

“In many application scenarios, such as smart factories, smart security and smart wearables, RedCap uses lightweight modules to reduce the cost and complexity of 5G terminals, popularize 5G IoT applications and enable ubiquitous 5G IoT. At the same time, operators can fully reuse existing 5G infrastructure, including sites, baseband units, RF units and antennas. Through software upgrades, operators can quickly deploy RedCap, driving connection growth, traffic growth, and service growth, achieving small investment and large profits,” the executive said.

“RedCap has attracted the attention of carriers, industry customers, equipment manufacturers and ecosystem partners since its inception. Currently, China has launched the first large-scale commercial use of RedCap … In the next three years, RedCap will gradually make breakthroughs in the 100 millions of connections and gradually integrate into many industries and consumer application scenarios, such as smart factories, smart cities, smart homes, smart wearables and smart vehicle connections,” he added.

The RedCap ecosystem is also ready for commercial use, with many IoT industry partners having released RedCap products. “It is estimated that the number of RedCap terminals will exceed 100 by the end of 2024,” Fang added.

Nokia is working with Industry 4.0 giant Rockwell Automation to test private 5G in standalone (SA) mode in the 3.55-3.7 GHz CBRS band in the US. Specifically, they are looking at private 5G for control and automation of industrial assets using industrial Ethernet (EtherNet/IP) protocols. The work gets into time-sensitive networking (TSN) capabilities, as delivered over fixed networks via such level-two industrial data exchange protocols, and as long-promised in ultra-reliable low-latency (URLLC) versions of the wireless 5G standard in 3GPP releases 17 and 18.

As well (see below), Nokia is working with RUCKUS Networks to deliver fibre and Wi-Fi in a single joint-solution for in-building and campus-wide broadband connectivity.

Nokia has issued a blog post about the Rockwell partnership, to say its private wireless and edge computing solutions have provided a connectivity platform for the US firm’s industrial automation solutions at a new testbed, and the two firms have “successfully validated” low latency and jitter in the setup, supporting EtherNet/IP standard and safety I/O communications. The collaboration does away with the kind of “special tuning or configuration” that has been typically required until now to get layer-two industrial protocols to work over private 5G. “Everything worked out-of-the-box,” said the blog.

Although there is no mention of commercial go-to-market tactics, the nature of the collaboration is significant for high-end Industry 4.0 to run on private 5G. In the end, it has been something of a surprise, probably reflective of the broadband focus of private 4G/5G networks in CBRS spectrum in the US so far, that Rockwell has not been quicker to make a noise about private cellular. In the most part, it might be noted that this is Nokia’s ‘noise’; but Rockwell has hosted the experiment and signed off the blog, which is co-authored by the US firm.

The Rockwell testbed comprises Nokia baseband units and radio (RAN) units, as well as its MX Industrial Edge (MXIE) server, hooked-up to Rockwell’s own automation solutions. The blog states: “This setup supports multiple automation devices behind a single wireless router, without any of the special tunnelling or extra equipment that is required for other industrial Ethernet protocols. The performance observed with CBRS is consistent with results using other licensed sub-6 GHz bands as used in other countries, making these findings “globally applicable”, the pair said.

They talk about industrial support in CBRS for “emerging technologies like industrial IoT, augmented reality (AR), and artificial intelligence (AI)”, and list a bunch of ‘use cases’, including: ‘edge-to-cloud connectivity’ for AI and ML applications; connected worker applications like analytics, digital twins, and AR; mobile asset applications for automated guided vehicles (AGVs) and autonomous mobile robots (AMRs), and ‘untethered stationary industrial assets’ just by doing-away with cables and making operations wireless. 

None of which actually sound like TSN-URLLC dependent apps for mission-critical comms; but the wider implication of the experiments, and of Rockwell’s involvement, are clear. The blog outlines the value of the CBRS provision in the US, providing 150 MHz of “lightly licensed” spectrum for use with private LTE and 5G networks, which can be requested in 10 MHz increments at no cost, or purchased in 20 MHz localised chunks via Priority Access Licenses (PALs). “Private 5G is ready for industrial use today, with an increasing number of customers showing trust in 5G,” they write.

They also talk about the value of 5G SA in edge setups versus traditional industrial Wi-Fi, citing 10-times wider coverage, indoors and outdoors, plus SIM-based authentication, and easy mobile device handover. The blog explains: “5G SA networks operate without a legacy LTE network, reducing costs and complexity while providing faster connections. As a result, using 5G for all network traffic (control plus user data) greatly reduces initial connection and handover times.”

They also include an illustration of an untethered stationary industrial asset, such as an AGV or AMR, on a private 5G network (see below), comprising “one area controller and two distributed areas representing skids, machines or equipment”, with the RAN in CBRS band n48 spectrum, attached to a baseband unit (BBU), two radio units (RUs), a 5G core network (on the MXIE edge server), and a couple of 5G SA routers.

Separately, the Finnish vendor has said it has joined with RUCKUS Networks, owned by CommScope, to integrate fibre and Wi-Fi in a single solution for in-building and campus-wide broadband connectivity. The new product is “uniquely tailored to the needs of diverse industry verticals”, including multi-dwelling unit (MDU; residential apartment block) properties, offices, large venues, hospitality venues, medical facilities, and other enterprise segments, they said. 

The hybrid fibre and Wi-Fi solution, combining Nokia’s optical LAN with RUCKUS Network’s enterprise Wi-Fi and switching solutions, can be deployed by sundry connectivity providers, including mobile operators, cable operators, and other local-area network providers. RUCKUS Networks, already sells to Marriott, Hyatt, Changi Airport, and the US federal government, among 1,000-odd enterprise customers, according to a press statement.

They declared: “Fibre is a game changer for campus and in-building connectivity due to its ability to offer future-proof capacity while significantly reducing power consumption and total cost of ownership. In addition to providing a single network for all services, it is essential to connect Wi-Fi access points. The combination of fibre and Wi-Fi delivers robust and scalable connectivity across mobility, IoT, and digital transformation initiatives.”

Bart Giordano, president of networking security solutions at CommScope, said:“The partnership… will change the economics for in-campus connectivity solutions for enterprise and vertical segments. As a single solution, we can now provide everything needed to quickly establish a LAN that can deliver fast, reliable, and secure broadband services. It will also allow us to future-proof networks and ensure the next generation of value-added services can be delivered easily.”

Sandy Motley, president of fixed networks at Nokia, said: “Fibre is a fantastic technology with a wide range of benefits. As an optical LAN, it can reduce energy costs by 40 percent and TCO by as much as 50 percent… We are creating a campus connectivity solution that will allow enterprises to grow their business, reduce their costs, and be more sustainable.”

India emerged as the second-largest 5G handset market in the world in H1, topping the US where shipment growth slowed, Counterpoint Research reported.

Shipments in India rose 60 per cent year-on-year, with the country accounting for 13 per cent of the total compared with 10 per cent in H1 2023.

China remained the leader, but growth slowed to 14 per cent and its global share fell to 32 per from 34 per cent.

Japan shipped 2 per cent fewer 5G devices and its share fell 1 percentage point to 4 per cent. 

The US share also dropped, to 13 per cent from 15 per cent.

Worldwide 5G shipments increased 20 per cent, accounting for 54 per cent of total handsets.

Senior analyst Prachir Singh noted the increased availability of budget 5G devices meant high growth in emerging markets.

Apple accounted for more than a quarter of total 5G shipments, with Samsung second (21 per cent) and Xiaomi third thanks to a triple-digit gain in India.

The research outfit did not disclose shipment numbers. It forecast 5G market share to reach 57 per cent this year and 65 per cent in 2025.

Dell’Oro Group reported microwave transmission equipment revenue declined 8 percent year-on-year in Q2 due to a slowdown in 5G deployments.

The research company stated point-to-point microwave transmission equipment revenue booked an annual decline for a fourth consecutive quarter, without providing specific figures.

The region with the steepest decline was

Asia Pacific dropped the most due to India, where revenue decreased 40 per cent.

Only the Middle East and Latin America booked gains.

Jimmy Yu, VP at Dell’Oro Group, noted the downward trend started in Q2 2023 and is “due to delays and slow starts in upgrading to 5G as operators in many parts of the world lack incentive to rapidly install” compatible networks.

Mobile backhaul revenue fell 9 per cent across long- and short-haul sectors, the latter of which was due to limited demand for full indoor units, with revenue here down nearly 40 per cent.

The company stated Aviat Networks, Ceragon Networks, Huawei and ZTE booked revenue increases.