Intel kills 5G deal with China’s Unigroup over U.S. security concerns

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Intel has halted a long-term plan to share 5G modem technology with a Chinese government-backed chipmaker, due in part to concerns over recent U.S. tensions with China, Nikkei reports. The deal was previously expected to expand Intel’s opportunities in China’s growing market, while aiding the Chinese government’s plans to develop its own chip industry.

Following a 2014 investment, under which Intel took a 20 percent stake in state-owned Tsinghua Unigroup, the companies last February announced a 5G tie-up as a “powerful combination targeting 5G smartphones.” Their “long-term strategic collaboration” was meant to create a 5G Android smartphone platform for sale in China in the second half of 2019, combining Intel’s 5G modem with a Unigroup chipset.

Now the Unigroup deal is off, a recent decision that Intel confirmed and characterized as mutual, while saying that it was not based on political pressure from the U.S. government. Even so, Nikkei reports that Intel wanted not to “somehow upset U.S. authorities given the current tensions” with China, and backed off the deal after the unexpected departure of its key advocate, former CEO Brian Krzanich.

The Trump Administration has spent the past year fighting a trade war with China’s government, while simultaneously accusing Chinese cellular companies Huawei and ZTE of facilitating espionage and committing sanctions violations. Though Huawei has repeatedly denied any espionage-related activities, it has faced mounting accusations from the government and private companies, while ZTE made a deal with the administration to resolve sanctions-related claims. Concerns still persist, however, and the U.S. government is threatening to ban the Chinese companies’ equipment from being used in cellular networks.

Intel’s 5G modem plans have also changed considerably over the last year. The company decided to skip its first-generation modem in favor of a more power-efficient sequel, delaying the arrival of consumer 5G products from 2019 to 2020. At this year’s CES and Mobile World Congress shows, the chipmaker focused largely on announcing new 5G server and base station components, letting rivals such as Qualcomm, Samsung, and Huawei premiere early consumer 5G devices.

Following the breakup of its Intel deal, Unigroup now says that it’s working on its own 5G modem without Intel’s assistance. Similarly, Huawei has already developed its own 5G modem and smartphones for sale to consumers in China, while other Chinese smartphone makers are expected to rely substantially on 5G modems from Qualcomm and MediaTek.

Source: VentureBeat

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