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EC approves €5bn state aid for new chip shop in Germany

The new foundry will produce wafers for customers in addition to the four stakeholders, TSMC, Bosch, Infineon and NXP

As the global scramble for silicon continues, the European Commission has approved €5 billion in state support to build and operate a chip manufacturing plant in Dresden, Germany.

It will be built by European Semiconductor Manufacturing Company (ESMC), which is a joint venture between the world’s biggest chip maker, Taiwan Semiconductor Manufacturing Company (TSMC), Bosch, Infineon and NXP. This is TSMC’s first manufacturing facility in Europe.

TSMC will contribute €3.5 billion out of the €5 billion to be invested by the companies and take a 70% stake. The other three will each have 10% equity.

Bosch opened a €1 billion new wafer fab in Dresden (pictured) in late 2021.

Strengthening Europe

The Commission said in a statement, “The measure will strengthen Europe’s security of supply, resilience and digital sovereignty in semiconductor technologies, in line with the objectives set out in the European Chips Act Communication”. This set aside a €43 billion fund to increase the manufacturing of chips in the European Union (EU).

The body also noted it would help the EU achieve some of its digital and green transition targets.

It is expected that the plant will be running at full capacity by 2029 and will produce 480,000 silicon wafers “with node sizes covering 28/22nm and 16/12nm” annually.

The factory is to be an “open foundry, meaning that any customer – including but not limited to the three other shareholders besides TSMC – can place orders for the production of specific chips,” the Commission said. “This operating model is important for the wider EU ecosystem, especially in view of ESMC’s commitments to provide dedicated support to European small and medium enterprises (SMEs) and startups, to strengthen their knowhow and competences.

“The facility will also provide special access to its production capacities for SMEs and European universities, further supporting research and knowledge creation within Europe,” added the commission.

Intel is also building new chip fabs in Germany after a revised, €30 billion agreement last year.

Ursula von der Leyen, the newly reappointed President of the Commission said, “European workers will gain 11,000 new jobs, both [in Germany] and across our continent. European chip companies will gain access to new technologies and production capacities. European industries will benefit from more reliable local supply chains, and new products that are tailored to their needs.”

Sky to offer broadband services on CityFibre’s infra from 2025

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They agreed a long term partnership – CityFibre’s goal is to pass 8 million UK properties and is almost halfway there

 CityFibre, which says it is the UK’s largest independent full fibre platform, announced a long-term partnership with Sky, one of the biggest retail broadband providers in the UK.

Under the agreement Sky will offer its broadband to customers on CityFibre’s fibre network. CityFibre passes 3.8 million homes today intends to expand its network to at least 8 million premises over time.

Sky currently offers broadband services via BT Openreach’s infrastructure. According to ISP Review, an announcement regarding CityFibre has been expected for some time.

Sky worked with CityFibre a decade ago in a joint venture with TalkTalk, piloting FTTP networks in the UK. The JV was later renamed Fibre Nation and sold back to CityFibre in 2020 for £206 million.

Long term plans

It is expected that Sky’s Full Fibre Broadband will be available on CityFibre’s infrastructure from next year. Longer term, this will include over 1.3 million homes in hard-to-reach areas through CityFibre’s participation in the Government’s Project Gigabit Programme.

CityFibre states it is “committed to accelerating the upgrade of its entire network to 10Gbps XGS-PON, supporting the introduction of an expanded symmetrical multi-gigabit product portfolio for its ISP partners”.

Greg Mesch, CEO at CityFibre said: “This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform [behind BT’s Openreach and Virgin Media O2]. With demand for digital connectivity continuing to grow, CityFibre’s network can provide the quality and reliability that people need and the infrastructure competition the UK deserves.”

Competition Authority clears Bouygues Telecom to acquire La Poste Telecom

Green light comes five months after the Bouygues Telecom announced that it was in exclusive negotiations to take control of the MVNO for €950 million

France’s Competition Authority (Autorité de la concurrence) has cleared Bouygues Telecom’s proposed takeover of MVNO La Poste Telecom without conditions. In February Bouygues Telecom announced its intention to acquire 100% of the capital of La Poste Telecom, the leading virtual operator on the French market (currently 51% owned by the La Poste group and 49% by SFR) and to conclude an exclusive distribution partnership involving the La Poste group, La Banque Postale and La Poste Telecom. 

The telco said at the time the deal would enable it to strengthen its base by approximately 2.3 million mobile customers. It would also enable Bouygues Telecom to rely on La Poste’s distribution network, which benefits from a strong brand recognized for its values of “trust and proximity”. La Poste Telecom has 400 employees and a turnover of approximately €300 million in 2023.  

The deal would also allow La Poste Telecom to continue developing its mobile business and build a new fixed-line proposition for its customers based on the values shared by both partners. La Poste Telecom operates in mainland France, Reunion Island, Mayotte, Guadeloupe, Martinique and French Guiana. 

Green light 

On 12 July 2024, Bouygues Telecom notified the Authority of its plan to acquire sole control of La Poste Telecom, currently controlled by the La Poste group and SFR. In the mobile telephony retail market, the Authority found that the transaction would bring about a limited change in the structure of competition, due to La Poste Telecom’s limited market share. It also considered the competition from Bouygues Telecom’s main rival MNOs, Orange, SFR and Free. 

The Authority also noted that Bouygues Telecom would have an extensive, dense distribution network throughout mainland France for the marketing of La Poste Telecom’s offers, thanks in particular to the La Poste group’s post offices/bank branches, which will continue to distribute La Poste Telecom’s mobile telephony offers.  

In its decision, the Authority considered, however, that the importance of this distribution network should be put into perspective, given the growing share of distance selling (online and telesales) in the mobile telephony market, which now accounts for two-thirds of mobile telephony sales. Consumers will continue to have access to alternatives via this sales channel, which covers the whole of mainland France, including rural areas where Bouygues Telecom’s competitors do not have physical branches. 

The Authority also considered that the transaction would not enable Bouygues Telecom, as an MNO, to refuse access or downgrade the conditions of access in terms of communication time in the upstream wholesale market for access and call origination on mobile telephone networks to MVNOs competing with La Poste Telecom. The Authority noted that existing regulatory obligations, competition from other MNOs in the upstream market and the absence of any incentive for Bouygues Telecom to implement such a strategy meant that the risk of such a strategy could be ruled out. 

Next steps 

According to Capital.fr, in addition to the agreement of the Competition Authority, this acquisition still requires the approval of SFR, committed to providing the La Poste Telecom network until the end of 2026. SFR has a right of pre-emption on the shares for sale as a priority, but also a right of approval of the purchaser.  

Singtel and Bridge Alliance to launch GPU-as-a-Service in southeast Asia

The first markets to benefit from the NVIDIA-powered platform will be Thailand, Malaysia and Indonesia

Singtel has formed a strategic partnership with Bridge Alliance to roll out GPU-as-a-Service (GPUaaS) across southeast Asia. The Bridge Alliance is a consortium of 35 mobile operators worldwide.

The Alliance and Singtel plan to offer GPUaaS to enterprises in markets including Thailand, Malaysia and Indonesia via leading operators AIS, Maxis and Telkomsel, respectively.

At launch, Singtel’s GPUaaS will be powered by NVIDIA H100 Tensor Core GPU-powered clusters. Singtel will also be among the world’s first to launch NVIDIA’s next-generation GB200 AI Servers.

The service will be expanded to run in new sustainable, hyper-connected, AI-ready data centres by Nxera, Singtel’s regional data centre business, across Singapore, Thailand, Indonesia and Malaysia when they begin operations from mid-2025 onwards.

Plan into action

In February, Singtel announced it would launch GPUaaS later this year to offer enterprises access to NVIDIA’s AI computing power so they can deploy AI at scale quickly and affordably.

According to a Kearney report, Racing toward the future: artificial intelligence in Southeast Asia, published in 2020, adopting AI could contribute nearly $1 trillion to the southeast Asia region.

Recognising the importance of AI, regional governments have launched national AI roadmaps to harness the technology responsibly and to its fullest potential. 

As part of the agreement, Bridge Alliance member operators will gain access to the GPUaaS from Singtel. As the countries’ need for AI grows, more GPU clusters will be launched in those countries to accelerate and scale the businesses.

Bridge Alliance says it will assist its members in fast-tracking their go-to-market strategies and help them successfully offer GPUaaS to enterprises.

Heartening news

Bill Chang, CEO of Singtel’s Digital InfraCo unit, said, “We are very heartened to see such strong interest from AIS, Maxis and Telkomsel to partner us in our GPUaaS offerings.”

Through its patented Paragon platform, Singtel was the first telco to bring AI to the 5G edge in the 5G@Sentosa trials for Singapore government agencies. Paragon orchestrated a multi-edge compute and NVIDIA GPU environment while enabling customers to deploy 5G use cases at speed and at scale.

“With more telcos deploying 5G network services, we see this real-time AI offering powered by GPUaaS at 5G edge at low latencies as a key growth driver for their enterprise businesses,” Chang added.

Ericsson to pocket $1bn from selling its digital ID unit

Koch Equity Development is buying the Swedish vendor’s majority stake

Ericsson is selling its majority stake in iconectiv, its number portability and digital identity business, to Koch Equity Development. It expects to make for SEK10.6 ($1 billion/€921million) in cash from the deal.

iconectiv is based in New Jersey in the US and the Swedish vendor became the owner of it as part of the acquisition of Telcordia back in 2012.

Francisco Partners acquired just short of a 17% stake in 2017 for $200 million which valued the business then at about $1.2 billion.

Subject to the usual regulatory approvals, the parties expect that the transaction to be finalised in the first half of next year.

On announcing the divestment, Ericsson issued a statement saying, “iconectiv serves over 5,000 customers across various sectors as a leading provider in number portability solutions, and a provider of core network and operations management, numbering and data exchange services as its main segments, and with limited strategic synergies with the rest of Ericsson’s portfolio.”

TIM Brasil picks Nokia to expand 5G next year

It will include deployment of the vendor’s AirScale portfolio, ReefShark and MantaRay products

TIM Brasil has chosen Nokia to expand its 5G RAN coverage across 15 Brazilian states from January 2025. This will increase the number of municipalities with access to 5G, although by how many was not disclosed and the value of the deal has not been made public either.

The map above, from Perf, highlights TIM’s 5G coverage in August 2024 in purple.

Under the deal, Nokia will supply from its 5G AirScale portfolio, including baseband, Massive MIMO radios, and remote radio head products. They are all powered by its ReefShark System-on-Chip technology. 

TIM will also use Nokia’s MantaRay Networks Management system for improved network monitoring and management. The vendor will also provide services, including digital deployment, optimisation and technical support.

Marco Di Costanzo, CTO at TIM Brasil, said, “This agreement…will benefit industries and consumers with new services, solidifying TIM’s position as Brazil’s leading 5G provider based on the number of sites.”

SoftBank looked to Intel to rival NVIDIA with AI chip – FT report

The plan fell apart when Intel was unable to meet demands – the episode highlights the inter-dependencies of the chip ecosystem

The Financial Times [subscription needed] says that Japan’s SoftBank held talks with Intel to build an AI chip that could rival NVIDIA. In June this year NVIDIA catapulted past Apple and Microsoft to become the world’s most valuable company, if temporarily.

Two years ago, its market cap was $300 billion – before the investor frenzy around GenAI caught fire. Now its AI chips and software platform, Cuda, are dominating the market. The company was already well-placed as the pioneer of GPUs but the shortage of chips has added to its allure.

SoftBank at the centre

SoftBank’s CEO, Masayoshi Son has ambitions to be central to the AI boom and plans to spend billions of dollars to rival to Nvidia’s AI silicon. Son has reportedly approached a number of Big Tech companies to support its aims, including Meta and Google.

The FT pointed out that SoftBank’s tie-up with Intel would have allowed the Japanese enterprise to take advantage of the Biden Administration’s Chips Act which became effective in March. It is offering $20 billion in grants and loans, designed to boost the domestic production of semiconductors.

Reports suggest SoftBank has now turned it attentions to Taiwan’s chipmaker TSMC, but it too is already struggling to meet its customers’ demands, which include NVIDIA.

Arm as chip maker?

SoftBank apparently intends to move chip design company Arm Holdings into chip production but this could upset its relationship with NVIDIA and others. SoftBank acquired the British company Arm for $32 billion in 2016. Arm’s primary business is the design of CPU cores that implement Arm’s instruction sets. It also designs other chips and provides software development tools. Its designs are used by many of the world’s chip companies, including NVIDIA.

SoftBank’s Son, who is not averse to risk, clearly thinks it’s worth the gamble and it is thought that Son’s recent acquisition of the UK AI chipmaker Graphcore is to acquire expertise in chip production.

Inter-dependencies

Last September SoftBank held an initial public offering of 10% of Arm’s shares on the NASDAQ, which at its opening valued the company at almost $60 billion. Intel was a major investor but has been engulfed in bad news since then.

In April, Intel reported a $7 billion operating loss in its foundry unit which sent its shares off a cliff and reports of a flaw in its PC chip designed followed. Intel sold its entire stake in Arm in Q2 for about $150 million.

Earlier this month it announced it will shed 15% of its workforce which led to a 25% plummet in its share price and a market cap of under $100 billion. It has also suspended dividend payments.

Intel is investing as heavily as it can to catch up with competitors including TSMC and South Korea’s Samsung in the design and production of chips, and to attract new customers. Having SoftBank walk away because it cannot fulfil the Japanese enterprise’s AI ambitions is hard blow for Intel.

Swiss operators hit 5G building application hurdle

A recent Federal Court decision may slow down the final 5G push in the country

At Swisscom’s recent results call, CEO Christoph Aeschlimann said the operator had increased the 5G plus coverage by 6 percentage points year-on-year and it now stood at 83% population coverage with 5G plus. However, a recent Federal Court ruling, which requires retrospective planning applications for mobile phone sites that have been upgraded to 5G, has left the chief executive annoyed.

Speaking to the AWP news agency, and reported by Nau.ch, Aeschlimann said Swisscom alone will need to submit 1,300 retrospective planning applications. Adding in Sunrise and Salt takes the total to 2,500 retrospective building applications to be done. This adds to around 2,500 building permit applications already pending.

“We are fighting to achieve the goal of 90 percent coverage with the fast 5G+ standard by 2025. But it has not become any easier with the Federal Court ruling,” the agitated boss (above) told AWP.

Swisscom has filed an appeal against this with the Federal Administrative Court and, if necessary, will take the case all the way to the Federal Supreme Court. Aeschlimann said he expects the proceedings to take five to eight years – just in time for 6G.

Swiss authorities discover beamforming

Netzwoche reported in July that the canton of Aargau allowed a regular building permit procedure for requests for changes to 5G installations, but its Department of Construction, Transport and Environment (BVU) announced that following the April Federal Court ruling, this straightforward practice was no longer legal.

Due to federal legislation (NIVS), mobile phone providers can apply a correction factor to the approved transmission power for adaptive antennas to increase their performance in the short term. Following the ruling, the BVU wrote to the mobile phone providers stating that for existing antennas with active correction factors that were approved in the simplified minor procedure without a building permit procedure, the operators must now subsequently submit a building permit application within six months or switch off the correction factor. This impacts 200 antenna sites in this canton alone.

Politics and power

In June, media outlet RTS warned that adaptive antennas can now emit up to 10 times higher than conventional antennas during their peak emissions, darkly warning that the decision to allow them effectively went against environmental considerations but what made as a political decision, vaguely implying it wasn’t science-based.

As part of the discussions which began in December 2020, RTS reported that the Federal Office for the Environment wants to allow operators to adjust directional antennas to a maximum of 4 times the legal power. The operators were asking to be able to adjust the power to 15 times more. And the Federal Office of Communications even agreed to go up to 20 times.

According to figures obtained by the media outlet, if the 5G antennas couldn’t emit new power, 46,000 more would need to be built rather than the 3,100 that operators, at the time, were suggesting. That would amount to quite a few planning permissions.

The Swiss on the whole are pretty ambivalent about 5G. A survey by Comparis in 2022 found that some 42.5% of adults supported the government’s strategy to encourage a rapid 5G rollout, but 41.7% were against.

How research is exploring future scenarios for European telecoms

The 5G&Beyond Observatory of the Politecnico di Milano investigates if it’s possible to foresee future scenarios and what the processes would be behind their identification?

The telecoms industry ‘s decades-old stability is being disrupted by technological paradigms, such as 5G, open RAN and edge-cloud, as well as economic challenges. As digital’s influence and significance grows across industries (see graph above, taken from white paper discussed below), the demand for high-performance network infrastructure and services rises. The infrastructures and services must meet the specific needs of different verticals and support the digital transformation of companies that rely on connectivity.

Many questions remain about the future ‘value network’ in telecoms. The landscape will be shaped by: the strategic decisions and innovation capabilities of industry players; regulatory and legislative industrial policies; changes at national and European levels; and being able to attract investment from stakeholders, including other supply chains.

In the long term, profound changes are expected to:

• the different layers of the current value network

• the roles and positions of existing players

• the nature of the players in the sector, and

• the relationships between companies within the ecosystem and their end customers, including consumers, businesses and the public sector.

Can we predict the future?

Is it possible to foresee future scenarios and what would the processes be behind their identification? Numerous researchers have tried to define a clear and comprehensive methodology to predict and possible and preferable scenarios using different approaches. Yet it is unclear whether the methodologies are reliable and which are the most suitable for analysing different industries. The challenge is not only to create forecasting tools but to validate their effectiveness and specificity in various contexts.

With this in mind, the 5G&Beyond Observatory of the Politecnico di Milano initiated a two-year project within the RESTART foundation program. Funded by the European Union*, since mid March 2022, the program has received a total investment of €116 million. This makes it the most significant public R&D initiative ever undertaken in Italy’s telecoms sector. The program involves 25 partners, including universities, research centres and private companies. It consists of seven missions and 19 grand challenges.

Evolutionary scenarios

The primary objective of this project is to explore potential evolutionary scenarios for the European telecoms ecosystem taking advantage of the large RESTART community of experts and their international relations. By identifying the factors and decisions that could influence its development, the project aims to support market players in navigating this transformation and assist decision-makers in taking informed choices.

The project addresses the Grand Challenge #0 – Envision the Future Evolution of the Telecommunications Ecosystem in Italy and internationally. The research team includes management engineers and a scientific director with a telecoms background.

The project’s first output , the whitepaper, A Techno-Economic View of the Future of Telecommunications, was published on the RESTART foundation website on 16 April. It was presented at the 5G&Co international conference, organized by the Interuniversity Consortium for Telecommunications CNIT. The paper has been translated into English to encourage European collaboration among similar projects and facilitate discussions on the future of the telecoms ecosystem.

It delves into the current structure of the telecoms ecosystem, aiming to establish an initial model representing the players and their value-creating activities. The document provides preliminary insights and will serve as the foundation for further research and devloping potential evolutionary scenarios.

It highlights issues such as declining market revenues, competitive dynamics and emerging technology trends. Based on a review of the academic literature on business models, value networks, and the definition of the telecommunications industry’s boundaries, a new definition of the telecommunications ecosystem perimeter is proposed, identifying 16 categories of different telco player archetypes.

A comprehensive model

The paper introduces a comprehensive model that will map relationships between various players, focusing on value creation and capture, and the evolving business models within the industry. This model outlines the architecture of telecomms ecosystem across five layers, from macro infrastructure components to service delivery.

Recommended value network architecture layers from the white paper

The first two layers deal with the physical infrastructure and have been divided into backbone infrastructure and mobile, fixed line and IT. Within these layers are the activities performed by infrastructure providers such as laying submarine cables, design and construction of mobile and fixed line infrastructure, and IT infrastructure like Internet Exchange Point (IXPs) and data centres.

Next is the layer related to network deployment in terms of functionality and networking, involving activities like spectrum provisioning and implementation of core and RAN functions. The final two layers deal with connectivity service delivery and value-added services. They are services that can extend to other supply chains and are not only related to connectivity solutions.

Value-added services has two sub-layers. The first is related to the commercialisation of general-purpose ICT services for the B2B, B2C and public sectors. The second one concerns consultancy and implementation services for specific vertical use cases for private companies and the public sector. A typical example is consulting and project integration for private mobile networks where the offer is the technology infrastructure and the enabling application.

Future configurations

Lastly, the white paper presents initial thoughts on the future configuration of the telecoms value network, derived from secondary sources and expert interviews. These insights are categorised into market structure, technology transformations and digital market roles. They emphasise trends like mergers and acquisitions, network softwarisation, and the increasing importance of AI, cloud and cybersecurity.

This provides the basis for mapping the mega-trend of the telco industry and start to define possible scenarios. Next we will identify the next steps of the research into future scenarios to evaluate each one qualitatively and define the overall value network.

The telecoms industry is at a critical juncture. The RESTART foundation program, spearheaded by the 5G&Beyond Observatory, represents an important step towards understanding and shaping the future of its ecosystem. By fostering collaboration and innovation, this initiative aims to provide a roadmap for industry stakeholders and policymakers, ensuring a resilient and adaptive telecom sector capable of meeting the demands of an increasingly digital world.

* NextGenerationEU as part of the NRRP – M4C2, Investment 1.3, Call n. 341

About the author

Edoardo Meraviglia is an analyst with the Osservatori Digital Innovation in Milan, Italy

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