Key points
- SpaceX picks Qualcomm for Starlink Mobile 5G
- Qualcomm calls SpaceX its biggest 5G deal
- Why SpaceX network cost estimates differ
SpaceX (SPCX) has selected Qualcomm (QCOM) to supply chips and software for Starlink Mobile's planned U.S. 5G ground network. The network would put SpaceX in competition with AT&T (T), Verizon (VZ), and T-Mobile (TMUS).
Deployment is expected to begin in 2027 and cover tens of thousands of sites over the multiyear agreement, Qualcomm said on Wednesday. Qualcomm didn't disclose financial terms, though it called the agreement its "biggest 5G deal yet," Reuters reported. Qualcomm executive vice president Durga Malladi also declined to disclose any contractual guarantees.
Qualcomm shares were up 3.4% at $169.97 as of 9:42 a.m. ET. SpaceX shares were down 3.5% at $136.37 after Democrats' midterm election wins.
Qualcomm didn't give a cost for the network. Joe Madden, principal analyst at Mobile Experts, estimates that SpaceX will spend at least $100 billion on its combined satellite and ground network, including spectrum, Axios reported. Verizon CEO Dan Schulman last month estimated $300 billion to $500 billion for a ground network.
How the SpaceX network cost estimates compare
| Who | When | Estimate | What it covers |
|---|---|---|---|
| Bernstein | August 31 | $50 billion to $130 billion | SpaceX building its own mobile network |
| TD Cowen | October 16 | More than $80 billion | A national ground network, not including customer service, device subsidies, and marketing |
| Verizon CEO Dan Schulman | October 26 | $300 billion to $500 billion | A ground network over seven or eight years, before retail and customer service |
| Joe Madden, Mobile Experts | November 4 | At least $100 billion | Combined satellite and terrestrial network, including spectrum |
The four estimates cover different costs, and the people making them have different perspectives. Schulman runs Verizon, which would compete with SpaceX. Bernstein's estimate came before SpaceX's October spectrum deal; at the time, analyst Douglas Harned wrote that "we still believe SpaceX is most likely to end with a partnership for its mobile business."
Some spectrum costs already have deal prices. EchoStar (ECHO) agreed to sell spectrum to SpaceX for $17 billion, then added more for another $2.6 billion, according to its second-quarter 10-Q. In October, SpaceX also agreed to buy Grain Management's 800 MHz spectrum for about $8 billion in cash, The Wall Street Journal reported. Together, the deals total about $27.6 billion, by our calculations.
The estimates of how many sites SpaceX needs vary too. Bloomberg reported on October 22 that SpaceX was in talks for access to at least 80,000 cell sites. Schulman said SpaceX would need 65,000 to 80,000 macro sites, the full-size towers and rooftop sites that carry most mobile traffic. Qualcomm's release says the rollout will cover tens of thousands of sites. SpaceX hasn't announced tower partners or said how many new towers it may need, CNBC reported.
What Qualcomm will supply
Starlink Mobile will use Massive MIMO radio units with 64 transmit and 64 receive paths. Massive MIMO uses many antennas at one site to direct signals toward users. Qualcomm's Dragonwing QRU100 platform handles processing for those radio units, and its Dragonwing QDU100 platform handles Layer 1 processing.
Qualcomm will provide the chips and foundational software for radio and baseband processing, while SpaceX will develop additional software and other elements of the network. Malladi said that once deployment begins next year, "it's going to ramp up pretty rapidly from there onwards," Yahoo Finance reported.
"Starlink is building the first fully-integrated nationwide satellite and terrestrial network that will keep people connected no matter where they are," Michael Nicolls, senior vice president of Starlink, said in the release.
The deal expands Qualcomm's presence in telecom infrastructure, where it will compete with Marvell (MRVL), Broadcom (AVGO), and Intel (INTC) in chips for cell tower gear. Qualcomm already helps power 5G networks in Japan and Vietnam.
What Madden says the deal signals
SpaceX has floated turning Starlink rooftop terminals into small cellular base stations. Madden said the Qualcomm deal signals a commitment to traditional, high-powered cellular infrastructure rather than relying primarily on those smaller sites. He expects SpaceX to build more efficiently than Verizon, AT&T, or T-Mobile, partly because it won't have to support legacy equipment. He also questions whether SpaceX could attract enough smartphone customers to justify the expense on that business alone.
The timeline is also in dispute. Schulman said a build would take "a minimum of four to six years." Elon Musk replied on X the same day, "Will take 2 or 3 years."
SpaceX is reportedly in talks to buy Boost Mobile or secure access to its network. Qualcomm reports fiscal fourth-quarter results after the close on Wednesday.
