5G baseband chips are chips that do a base station's signal processing. They turn the radio samples from the antenna into the data each phone sent, and they turn outgoing data into samples to transmit. Baseband means the signal in its digital form, before it is placed on a radio frequency or after it is taken off one. Some newer chips put all of a 5G base station's processing on one programmable chip. These are sometimes called a base station on a chip.
Baseband processing is heavy work. The chip must separate thousands of narrow frequencies that carry the data, undo the distortion caused by walls and moving people, and correct the errors in what arrived. It must do all this for every phone, in less than a millisecond, again and again.
For a long time, the big equipment makers did this processing on their own custom chips, inside their own sealed boxes. With Open RAN, much of it moved onto ordinary servers that run RAN software, with accelerator cards to help. A 5G baseband chip offers a third way. It does most of the processing on one chip, at low power, and its behaviour can be changed by software. A radio whose behaviour is set by software in this way is called a software-defined radio.
Take, for example, a company that builds small cells for warehouses. Its engineers want one small cell for a parcel warehouse near Bhiwandi, which handles 30,000 parcels a day. Scanners and handheld terminals in the warehouse send data over private 5G. The company does not want a server and a rack of cards inside every small cell. So it designs the small cell around one baseband chip. The chip takes the samples from the radio, recovers each scanner's data, and passes it to the RAN software within a millisecond. Later, when the standard is updated, the company sends a software update to the chip instead of replacing the hardware.
The chip company sells to equipment makers, operators and companies building private networks. It wins business through design wins. Most such companies are fabless: they design the chip in places such as Bengaluru, and a factory abroad makes it.
How does it differ from a cellular modem chip? The modem chip does the same kind of work at the phone's end, for one phone. The baseband chip at the base station does it for hundreds of phones at once.