With the federal government serving up a billion-dollar mandate for rural cable operators to swap out Chinese networking equipment as they move to 5G, American makers of switches and silicon are lining up for a retrofit windfall.

Cisco and Intel are getting ready to replace base center and data center hardware made by China’s Huawei with equipment claimed to make more efficient use of the expanded telecom frequency spectrum. Also included in their offers are software and services that give the operators cloud-based control at the network edge

There’s financing involved, too, as the Silicon Valley giants race to grab a portion of the subsidies that the Trump administration is giving the local systems for swapping out infrastructure hardware made by China’s Huawei.

Frozen Out

President Donald Trump's trade war with China may have cooled while he runs for reelection, but Huawei remains on a blacklist prohibiting American companies from working with the world’s largest telecommunications equipment maker on national security grounds.

Late in February, the Senate unanimously passed and sent to Trump the Trusted and Secure Communications Networks Act, which prohibits local phone and cable companies from buying Huawei servers and routers by its Chinese counterpart, ZTE.

Both vendors are closely aligned with the Chinese army and a bipartisan collection of US officials including House Speaker Nancy Pelosi say the tech companies have built backdoor spyware into their equipment that gives Beijing ready access to American data.

"While some people say that it’s cheaper to do Huawei — well yeah — it’s a People’s Liberation Army initiative using reversed engineering from Western technology,” Pelosi told NATO leaders mulling Huawei's gear month. “And if it’s cheaper, they get market share." That’s "like having the Chinese state police right in your pocket.”

FCC Forcing Change

Expected to be signed by Trump well ahead of the November elections, the act will formalize the so-called Entity List ban imposed by the Commerce Department on Huawei last May. ZTE was added a month later.

Tech giants like Microsoft have won exceptions and continue to supply Huawei. Rural operators also received exemptions to use the Chinese-made switches and routers. Now, the Federal Communications Commission is pressing the community-based carriers to rip and replace the Chinese equipment as they move their systems to 5G, which began its US rollout late last year.

SoC Solutions

Timely launches from Intel and Cisco reflect the impending mandate that sees the FCC offering financial support for the retrofit over and above the $8.5 billion that it spends annually to assist telecoms operators.

Intel execs briefed the media last month on custom-tailored and second-generation chips that their research teams optimized for handling large volumes of data. Included is an applications-specific integrated circuit that Intel engineers built for 5G base stations and a scalable version of the Xeon chips it makes for data center servers.

The Atom P5900 is a system-on-chip or SoC that is based on low-latency architecture called Tremont, which pushes per-core performance with a larger cache. Intel forecasts the SoC to capture around 40% of the market for 5G base stations by the end of next year.

Virtualizating The Market

Meanwhile, Cisco is promising rural telecoms a path to profitability with a range of product and service upgrades. Included are routers with high-density ports that facilitate faster decoding of the data packets that flow between network control centers and radio-mast transceivers.

The company that makes around 50% of the network switches and routers in use worldwide says the additions to its Crosswork automation will help operators handle volumes from the increasing number of devices that 5G-connectivity will link. Financing and revenue-sharing options are aimed at speeding uptake.

Despite rosy predictions, how fast and how far both will go as they take aim depends on more than a stroke of the president’s pen. The FCC’s requirement that local operators inventory their infrastructure in order to obtain subsidies will help to size what is now an opaque market for 5G.