Feb 06, 2018 • 08:30 am ET

Previous

Share
Close

Loading Event

Loading Transcript

Q & A
Operator
Operator

(Operator Instructions) Gary Mobley, Benchmark.

Analyst
Gary Mobley

Yaniv, am I doing the math right, 4G LTE units in the fourth quarter were 94 million roughly?

Executive
Yaniv Arieli

4G were 82 million units.

Analyst
Gary Mobley

Apologies. So much from my math. You said what 311 million for the full year?

Executive
Yaniv Arieli

Yes, but take into account, but there is a new segment of the feature phone based LTEs, so some of that still fall into the future phone as a phone segment, but overall it's part of our LTE modems.

Analyst
Gary Mobley

Regarding 5G LTE radio access networks, do you still feel that, that ZTE will be the primary contributor to royalty revenue in 2018? Can you share with us what 5G LTE base station related royalty revenue was in the fourth quarter, and can you comment on Nokia's recent launch, ReefShark, if that's what you're eyeing as it relates to your second half 2018 or 2019 additional contributor to 5G related royalties?

Executive
Gideon Wertheizer

Gary, it's Gideon. Let me -- because we were in the last few years a bit tight-lipped in what we are doing or what our customers are doing in the RAN market, RAN market is an umbrella of all the different use cases in a base stations for DSP processing. I mean we are not just doing the -- we are not in just one place, we are in macro cell, we are in the small cells, we are in the cloud RAN, we are doing remote radio head. So our DSP is in several places there. Now we spoke about the customer which is already in production, not in full scale. The scale is going up this year, I would say, even significantly. And there is another customer that is going to get into production and this is on track. I don't see any stumbling issue in terms of not doing it this year.

The question is how the magnitude of this initial ramp that also the first time, we have to see. Now we are -- our entry point with these two customers that will be in production the second half of this year is what is called LTE-Advanced and LTE-Pro. Only one-third of the LTE base stations today have been upgraded to the faster LTE which is LTE-Advanced and LTE-Pro. So our entry point is with this product line to the LTE-Pro, there is a software upgrade, they can do a software upgrade and go to 5G, the 5G which is already certified, not the envelope. The highest 5G, the most advanced 5G that we made to go the XC12 and this will be more toward 2020. So overall things are on track.

There is in the last two years, lower investment, CapEx investment in this respect. The expectation in 2018 to grow to a full scale, so then by 2020, we will have probably kind of a tailwind, but there will ramps and even significantly in the second half of the year, and we just -- we took a prudent approach at this stage