The global ascent of 5G applications remains in full swing. David Chou, General Manager of Ericsson Taiwan, notes that Fixed Wireless Access (FWA), mobile Internet of Things (IoT), and RedCap (Reduced Capability) stand as the three dynamic forces propelling the sustained evolution of 5G. For Taiwanese suppliers, all three promise substantial demand, potentially ushering in significant contracts for relevant supply chains on the island.
In the realm of FWA, over 50% of global telcos have already rolled out 5G FWA services. When extending the scope to 4G FWA, 78% of operators now provide related services. Notably, North America leads the charge in FWA adoption, with Chou indicating ample room for growth. Forecasts suggest an increasing number of telcos will join the FWA service bandwagon, potentially surpassing the proportion of 5G mobile users. This surge is expected to propel continuous growth in shipments of Customer Premises Equipment (CPE).
Traditionally associated with sparsely populated areas with expansive coverage, recent data challenges this notion, revealing rising FWA adoption even in regions with robust fiber networks, such as Hong Kong and Singapore.
The burgeoning FWA sector bodes well for the Taiwanese supply chain, encompassing network equipment manufacturers and those strategically positioned in the expansive North American FWA market. Chipmakers and optical communication companies upstream also look to benefit from an upswing in orders.
Chou envisions a robust connection of 330 million FWA devices by 2029 to potently boost Taiwanese businesses. The Asia-Pacific region, notably India, emerges as a hotspot for substantial growth, potentially exceeding the current maximum capacity of Taiwanese manufacturers over the next 24 quarters.
Mobile IoT emerges as a potent catalyst for 5G growth, with connections expected to double from 3 billion in 2023 to 6 billion by 2029. As a critical manufacturing hub for mobile IoT terminals, Taiwan anticipates a significant uptick in shipments spurred by rapid demand growth. By late 2023, the base of WB-IoT connections had already reached 160 million, commanding the largest share of overall IoT technology. This figure is anticipated to rise to 60% by 2029, while IoT devices connected via 2G and 3G witness a diminishing trend.
5G RedCap adds further dimensions to the application scenarios of WB-IoT. Chou highlights the prerequisite for 5G to operate as a Standalone (SA) network for the development of RedCap. Some nations already equipped with SA networks, including China and India, can swiftly implement RedCap. The significance of RedCap for Taiwanese businesses is paramount, and with SA networks still undergoing testing, the introduction of RedCap services is expected post-commercialization. Overall, RedCap is poised for increased device support in 2024.
In a notable development, Ericsson Taiwan and MediaTek jointly unveiled 5G IoT technology, encompassing RedCap and wearable devices like smartwatches, in August 2023.
In summary, the initial gains of 5G, marked by heightened penetration rates, infrastructure development for 5G base stations, and the ensuing impact on 5G smartphone shipments, are gradually materializing. As 5G continues its evolution, the next surge of growth will emanate from FWA, mobile IoT, and RedCap. Shipments in these domains, compared to smartphones, are anticipated to be no less impactful, spanning a spectrum of sectors, including chips, network equipment, smart devices, and IoT devices—marking the forthcoming phase of 5G dividends.
