In telephony, 3G and 4G changed the way we communicate as the mobile internet, live streaming, and online games became part of everyday life. Now 5G is close to launch in China and that is a much bigger step forward. It will drive advances in technologies such as virtual-reality, autonomous driving, high-definition video, the Internet-of-Things and augmented-reality.
China’s political leaders have said they want the country to lead the world in 5G. This suggests huge investment. The 5G capital-expenditure cycle should start in 2020 with investment rising 34 per cent to 403 billion renminbi – USD60 billion. The launch will impact the industrial and commercial world far more than how consumers use their smartphones.
Network testing has already started and we expect the government to issue the first 5G licences to China’s three major telecom companies in in the first half of this year, with commercial services starting in 2020.
The next key date is then expected to be March 2020. That’s when 3GPP, the international body in charge of the global 5G roll out, will issue the document finalising the technical standards for 5G.
Once that is been published, watch out for three new technical features: enhanced mobile broadband, which provides faster, more power efficient broadband; ultra-reliable low-latency communication, which reduces signal delays; and massive machine-type communication, which makes the Internet-of-Things work better.
Those three will lead to advances in virtual and augmented reality, high-definition video, autonomous driving and smart cities, and they should have gained traction by 2021.
There are forecasts that global mobile data traffic will increase fivefold between 2018 and 2023 with cellular Internet-of-Things connections surging from 1 billion to 3.5 billion. With increased pressure on network capacity, 5G is a natural solution for telecom operators looking to upgrade. One-fifth of global mobile data traffic could be carried by 5G networks in 2023.
Demand for components for smartphones and wireless networks will grow enormously. The highly-specialised ceramic-based radio frequency filter market in China is forecast to grow from 134 million renminbi last year to 10.6 billion renminbi in 2020, driven by the increase in 5G base stations, for instance, while the printed-circuit boards market in 5G antenna systems could surge sixfold to 43 billion renminbi by 2024. Demand for radio frequency filters for base stations, optical transceivers and optical fibre will also increase significantly.
The 5G revolution will not be limited to China though. Some forecasts suggest it will contribute USD2.2 trillion to the global economy over the next 15 years with capital spending in countries deploying 5G surging from USD41 billion last year to USD123 billion in 2020.
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The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Frank He
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