Industry Voices—Madden: China’s 5G ramp-up will start soon, and it will be huge

The Chinese government has not made any official announcements yet with regard to spectrum and 5G ramp-up plans, but the big network vendors are starting to pump up the tires on the supply chain. Our checks with semiconductor and component vendors confirm that the 5G ramp-up in China is expected soon, and it will be bigger than anyone expected.

In particular, we have heard from at least 10 different suppliers that the China 5G ramp-up is now expected to start in early 2019, not in July 2019 as previously scheduled. In addition, the numbers could become huge by the end of 2019, with deployment of enough 5G base stations to cover Germany during the month of December.

This is a very odd situation. In my 2G, 3G, and 4G experience, I’ve never seen an OEM pushing a forecast so hard, before the mobile operators even have their spectrum lined up. They’re asking vendors to triple production capacity for specific components, so this is not a meaningless exercise.

If the ramp-up is only six months away, this one will break all speed records. They are pumping up the tires to be ready, but will there be any gas in the tank?

The dominoes will need to start falling in rapid succession now. Some key questions need official confirmation, and then the practical issues of the ramp-up will become critical:

  • When will the Ministry of Industry and Information Technology (MIIT) release spectrum?
  • Precisely which frequency blocks will be awarded to China Mobile, China Unicom, and China Telecom?  
  • Will China Mobile get both 3.5 GHz spectrum and 4.8 GHz spectrum as previously suggested by MIIT?
  • Which cities will ramp up during 2019?
  • Can the industry ramp up all necessary components in time? (In particular, will multilayer ceramic capacitors, ADCs/DACs, or GaN devices limit the ramp?)
  • How many base stations will use Massive MIMO (16T16R, 32T32R, or 64T64R configuration)? How many will involve a simpler upgrade of the existing 4T4R or 8T8R radios?
  • Can the Massive MIMO antennas be deployed so quickly?
  • Can ZTE get into position to support 5G production in time?   
  • What percentage of the China 5G network business will be available to non-Chinese suppliers?
  • How quickly can 5G handsets be produced to match the network acceleration?

We’ve investigated these issues and we have satisfactory answers for most of them. Handsets will be ready. Massive MIMO will be, well, massive. And we’ve identified the main component areas that will need a doubling or tripling in manufacturing capacity.

The bottom line: We believe that China’s government is in a hurry to prove something to Mr. Trump. They will be pushing hard to get base stations onto rooftops as quickly as possible, whether they are optimized or not. If you ask me, they consider this 5G network essential to the trade negotiations. In other words, they need to flex this particular muscle.

Don’t bet against this one. Suppliers need to be ready by January to run at full speed.

Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets. The team provides detailed research on Small Cell, Base Station, Carrier Wi-Fi, and IoT markets. Mr. Madden currently focuses on trends in 5G, IoT, and Enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of Digital Predistortion, Remote Radio Heads, Small Cells, and the rise of a Mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers, to find the match between business models and technology. Mr. Madden holds a physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.

"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.