Chipmaker Xilinx 5G orders kick off the race to take advantage of new networks

(Reuters) – Xilinx Inc. had a sunny season for semiconductor companies as the Chinese economy slowed down. Revenue growth is driven by the early phases of 5G wireless data networks, which are faster and less expected than expected.

These networks, up to 100 times faster than existing networks, will generate billions of dollars in equipment and chips. South Korean and Chinese operators plan to roll out 5G networks this year, and handset manufacturers, including Samsung Electronics Co Ltd, plan to operate the phones on these networks.

Surprisingly, spending on these networks increased the company's San Jose, California-based revenue by 27 percent in the fourth quarter, although most badysts believe the networks will not widely available before 2020.

"The beginning of this ramp [up of 5G spending] "It's happening faster than expected," Xilinx chief executive Victor Peng said on January 23. "And the strength to get out of the grid is pretty strong."

As deployment accelerates, Xilinx will face competition from other chip makers with similar products that constantly tweak the new technology, badysts said.

And as the standards mature, the programmable chip maker will have to compete with less flexible but faster and cheaper customized chips, "said Kinngai Chan, an badyst at Summit Insights Group.

Intel Corp's Altera division, for example, also manufactures programmable chips and is about to benefit from 5G, although Kevin Cbadidy, an badyst at Stifel, said the unit accounts for only about 3 percent of revenues. Intel.

Marvell Technology Group Ltd. is already manufacturing a custom chip and Qualcomm Inc plans to launch it. Some major network gear manufacturers manufacture their own chips, like the ReefShark Nokia chipset, released last year.

Tristan Gerra, chief research badyst at RW Baird, typically needs at least a year for custom chips to start gnawing away at their marketable chip market.

This may cause Xilinx to lose the risk of losing customers in China and Korea next year, but at that time, US carriers will be building networks, giving Xilinx new opportunities to win markets.

And Xilinx, meanwhile, sells other 5G products, such as a combination of a chip of badog radio chips and digital processors that aim to replace multiple components such as Analog Devices. and Texas Instruments.

"This integration should make Xilinx's design more challenging – we believe Xilinx will continue to see a winning design activity for 5G in the next few years," said Gerra de Baird's.

When Xilinx's results came out last week, its CEO pointed out that these chips were a way to keep the 5G's business going, even though custom chips were starting to gain share.