What’s up with… AI chips, the RAN market, Three UK

• Challengers line up to take on AI chip giant Nvidia
• RAN market shrinkage may be past its worst
• Three UK grows subs and sales but is still losing money

In today’s industry news roundup: Everyone wants a piece of Nvidia’s giant market share, with Huawei and SoftBank the latest in line; the radio access network (RAN) equipment market is still in decline but the worst might be over, according to Dell’Oro; mobile operator Three UK uses its latest operating loss to make another M&A plea to the regulators; and much more!

Everyone wants to rival AI chip giant Nvidia, but it’s easier said than done. According to The Financial Times (as referenced by Reuters), Japanese giant SoftBank had been in talks with Intel about the co-development of AI semiconductors that could rival Nvidia’s currently market-leading products, but a partnership did not materialise after it became apparent the US chip firm could not meet SoftBank’s requirements for production volume and speed. According to the FT, SoftBank is now in talks with the world’s largest contract chip manufacturer TSMC (Taiwan Semiconductor Manufacturing Co.), which, it should be noted, is the company that actually produces most of Nvidia’s high-performance GPUs (graphics processing units).  

Meanwhile, reports suggest Huawei is on the cusp of releasing a processor, dubbed the Ascend 910C, that has been designed to match the capabilities of Nvidia’s high-end GPUs. According to Tom’s Hardware (citing the Wall Street Journal), the Chinese vendor has developed the processor to compete with Nvidia’s products, such as the H100 GPU, in the Chinese market and has already provided test samples to the likes of China Mobile, ByteDance and Baidu ahead of a planned commercial launch in October. All the while, Nvidia remains the clear global AI chip leader and the company that everyone wants to do business and partner with. Nvidia’s market value currently stands at $2.93tn – yes, trillion! – and its share price, at $119.98, is up by 149% this year – yes, 149%! Nvidia reports its next financial results on 28 August, when rivals will once again no doubt read ‘em and weep.     

And back with Intel… The US chip giant has offloaded the shares it held in chip design vendor Arm, reports Reuters. During the second quarter of this year, Intel sold the 1.18 million shares it held in Arm, a move that would have brought in about $147m, according to the news agency’s calculations. The move comes as Intel tries to right its financial ship – see Intel to cull 15,000 jobs as it targets cost cuts of $10bn.

The global radio access network (RAN) equipment market is still shrinking but there are signs that the worst of the decline might be over, according to research firm Dell’Oro Group. According to the company, the sector has shrunk by a double-digit percentage in each of the past four quarters, but there are now signs that this disastrous rate of decline might be coming to an end. “Even if the RAN market is still down at a double-digit rate in the first half, the second quarter offered some glimmer of hope that the nadir of this cycle with double-digit declines might now be in the past for the time being,” noted Stefan Pongratz, VP and analyst at Dell’Oro, in this press release. “This does not change the fact that the RAN market is expected to decline at a 2% CAGR over the next five years. But the pace of the decline should moderate somewhat going forward,” added Pongratz. The company doesn’t share market value numbers in its announcements, but TelecomTV’s previous back-of-the-envelope calculations suggest that Dell’Oro’s forecasts value the RAN market at somewhere in the region of $35bn for calendar year 2024. The top five vendor list for the global market doesn’t change much – it is still (in descending order of RAN revenues) Huawei, Ericsson, Nokia, ZTE and Samsung. Dell’Oro did note, though, that Huawei’s revenue share in the first half of this year is up, while the market shares of European duo Ericsson and Nokia are down.  

British mobile operator Three UK continued its indirect appeal to the country’s competition watchdog, the Competition and Markets Authority (CMA), regarding its proposed £16.5bn merger with Vodafone UK as it reported its first half financial results. The operator increased its active customer base by 3% year on year to 10.9 million and generated revenues of £1.34bn for the first six months of the year, a healthy 9% better than in the same period a year earlier. However, despite reducing its capital expenditures (capex) by 16% to £230m in an effort to achieve profitability, higher operating costs meant Three UK reported an operating loss of £30m – an improvement year on year but still in the red. “Despite scaling back our capex, we continued to make a loss driven by the escalating inflationary costs of operating our network. Our cashflows have been negative since 2020 and our costs have almost doubled in five years, meaning investment in [our] network is unsustainable,” stated CEO Robert Finnegan. “UK mobile networks rank an abysmal 22nd out of 25 in Europe on 5G speeds and availability, with the dysfunctional structure of the market denying us the ability to invest sustainably to fix this situation. Our merger with Vodafone will unlock £11bn worth of investment in digital infrastructure, creating a best-in-class 5G network for the UK and helping to grow the UK economy,” he added. That may well be the case but the CMA is still locked in its Phase 2 investigation into the merger, has already expressed concerns that merging two of the UK’s four network operators might not be good for market competition, and as we reported in June, has been fielding multiple submissions from interested parties, such as BT, that have been arguing against the merger.  

Singtel reported a slight dip, 1% year on year, in fiscal first quarter revenues to just over 3.4bn Singapore dollars (US$2.59bn) but a 16.1% increase in operating profit to 382m Singapore dollars (US$290m), thanks mainly to margin improvements at its Optus operation in Australia (which generates about half of its reported revenues) and at its enterprise IT services unit NCS (National Computer Systems). Group CEO Yuen Kuan Moon stated: “We had a solid start to FY2025 with improvements in our core businesses in Singapore and Australia and momentum in our growth engines in the first quarter. This helped mitigate lower contributions from our regional associates due mainly to significant currency headwinds in Africa. NCS recorded strong bookings and Nxera” – Singtel’s datacentre unit that is part of its Digital InfraCo division – “continues to expand its platform through a new datacentre project in Malaysia, reflecting strong demand from digitalisation and AI adoption. Singtel also announced together with KKR an investment into STT GDC. These are positive trends as we execute our Singtel28 growth strategy. Although the macroeconomic environment appears more challenging, we remain optimistic about the growth opportunities across our markets and are well-positioned with the resources and capabilities to capture them.”

MVNO (mobile virtual network operator) Lyca Mobile has been issued with a winding up order by the UK’s HMRC (His Majesty’s Revenue & Customs), reports The Guardian, after a tax tribunal ruled in favour of the British tax collector over the mobile service provider’s unpaid bills that amount to more than £50m. (A UK winding up order, The Guardian explains, is a formal legal process that creditors can use against a company that owes them money and is unable to pay its debts and can result in assets being forcibly sold.) According to the report, the company has a history of questionable financial reporting and its latest auditors said in June it couldn’t sign off the company’s accounts because it had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion”. Lyca Mobile, which describes itself as “the world’s largest MVNO” (more than 16 million connections in 22 markets), reportedly generated revenues of £145m and a loss of £24m for 2022, the last year for which financial numbers are available. 

- The staff, TelecomTV