5G to contribute $700bn to global economy by 2030
The rollout of 5G is forecast to contribute $700 billion to the global economy by 2030, with a compound annual growth rate of 20%.
This is according to the 5G Technology, Market and Forecasts 2019-2029 report, compiled by research firm IDTechEx, which examines 5G infrastructure and its impact on end-user industries.
“The global rollout of 5G is a revolutionary rise that represents one of the largest emerging markets in the coming 10 years. Over the next 10 years, global telecom operators will invest $1.2 trillion to $1.5 trillion in 5G network rollouts, most of which will be for sub-6GHz 5G,” notes the report.
“China alone expects 5.8% of its GDP growth to derive directly from 5G technology by 2030. Mobile and Internet operators in China have announced plans to spend YEN34 billion ($313 billion) on 5G this year.
“Equipment providers, including network equipment and user equipment, will benefit significantly from the massive rollout of 5G networks, with more than half of the telecom operators, including those in China, Japan and Europe, speeding up their 5G rollout and targeting a commercial launch between 2019 or 2020.”
Not only will 5G accelerate the growth and expansion of telecommunications, but the demand for 5G user equipment and services from other vertical applications will become the main drivers in seven to10 years, led by automotive, industrial automation and healthcare, according to IDTechEx.
It points out that 5G will bring opportunities in four different aspects: infrastructure, user equipment, 5G services and vertical applications. 5G rollout will also take place in three different stages: imminent market opportunities, coming market opportunities and dominative market opportunities.
Imminent market opportunities: Infrastructure
The first wave of 5G investments is the deployment of 5G infrastructure. Last year, the US and South Korea spent $41 billion on 5G infrastructure, while global capital expenditure on 5G was around $161 billion in 2018.
With the nationwide rollout of 5G this year, South Korea, the US, China and Japan are likely to increase their capital expenditure on 5G infrastructure, predicts the report.
Companies accounting for the largest share of infrastructure investments include heavyweights such as Ericsson, Nokia and Huawei. The largest supplier, with a 28% global market share, is Huawei, which has been trying to race ahead of its rivals to become the top player in 5G, and has signed 40 5G commercial contracts so far, with more than 70 000+ base stations.
However, future competition is still unclear as the US government increases pressure on many countries to ban Huawei from supplying equipment for 5G networks.
Last week, the Chinese government gave licences to major state-owned mobile carriers, including China Telecom, China Mobile and China Unicom, for the commercial rollout of 5G, a move experts said was partly a response to the ongoing trade war with the US.
In August 2018, US president Donald Trump banned the US government's use of equipment made by Huawei. In January, Washington intensified a campaign against Huawei, alleging its equipment could be used for spying and espionage, and urging US allies to ban it from their next-generation 5G mobile networks.
Czech Republic and Norway have joined the list of countries considering excluding Huawei from equipment tenders, as Germany weighed in on what it would need to be convinced to allow the Chinese tech giant to bid for 5G contracts.
Japan has also excluded Huawei from public procurement, and Australia and New Zealand have effectively blocked Huawei from involvement in the rollout of their 5G network infrastructure. A number of other western allies are considering excluding Huawei from forthcoming infrastructure rollouts.
Huawei has repeatedly denied installing any backdoors in its networking equipment for alleged government spying.
In February, mobile data-only network operator, Rain, launched the first 5G commercial network in South Africa, in partnership with Huawei. The announcement was made at Mobile World Congress 2019 in Barcelona, Spain, making it the first network to launch 5G on the African continent, and one of the first in the world.
Ericsson reportedly said it has won roughly 50% of the world's 5G contracts so far, while last week, Nokia announced 42 commercial 5G deals in place with operators around the world and launched over 100 trials with partners from Korea, Japan, the US, Australia and more.
Samsung says it has delivered the largest share of 5G network solutions in Korea, making it the leading 5G network vendor in the country. It has deployments, with more than 53 000 base stations installed.
“The massive rollout of 5G opens a new and increasing market for materials and components that are essential for 5G technologies. The companies that develop innovative solutions for radio frequency front-end modules (filter, power amplifier and more), active antennas, optical transceivers, optical fibres, thermal management, and small cells will benefit from the fast growth in the 5G area,” notes IDTechEx.
Coming market opportunities: user equipment
The second wave of 5G investment will comprise new 5G user equipment and devices.
Increasingly, devices such as augmented and virtual reality glasses, 8K TVs and wearables will integrate with 5G, creating significant growth in the technology market which is expected to exceed hundreds of billions of US dollars by 2025, according to the report.
By late-April, there were 48 announced 5G devices from 26 vendors, many of which are 5G smartphones. Pioneers include the Samsung S10 5G, Huawei Mate X and Motorola 5G Moto Mod, and more from LG, Xiaomi, VIVO, OPPO and OnePlus.
“These 5G smartphones will reach global markets in 2019, with a mission to rescue a declining global mobile market. With the agreement to drop all litigation with Qualcomm, Apple is also likely to launch its 5G iPhone soon. The average price for a 5G smartphone in 2019 is expected to be $1 000-$1 500 but it will drop significantly in 2020,” according to the report.
Dominative market opportunities: services and vertical applications
The success of 5G will enable the possibility to link various wireless services to one universal cellular network.
“Sectors, including automotive (autonomous drive, in-car entertainment systems), Industry 4.0 (remote-controlled robots and drones, intelligent machines), media experiences (5G TV, cloud game-streaming) and healthcare (remote diagnostics and surgery, digital health) are all set to be influenced by the 5G service boom to come,” notes the report.
These service sectors will contribute 60% of the revenue for 5G technology in 2030. However, it will take years for these vertical applications to adopt the technology, as a search for a sustainable business model continues.