5G is an extension of 4G, but unlike 4G, 5G is not a single wireless access technology, but a truly integrated network. Compared with 3G/4G technology, 5G technology has high transmission rate, large network capacity, and short delay, which can improve network energy efficiency more than a hundred times, truly opening the Internet age of all things. The IMT-2020 (5G) Promotion Group in China has defined the main technical scenarios of 5G: continuous wide area coverage, high capacity hotspots, low power consumption and large connectivity, and low latency and high reliability. The three scenarios defined by the International Telecommunication Union (ITU) are basically the same, except that China further divides mobile broadband into two scenarios: wide area coverage and hotspot high-speed.
2018 is a milestone year for the communication industry, and the overall industry is at a pivotal moment of "three phases overlapping". On the one hand, the industry is on the eve of transitioning from 4G to 5G, and the business model will shift from meeting people's communication needs to enabling vertical industries and enterprises; On the other hand, 2018 is also the starting point for the resonance between the 10-year intergenerational cycle of the communication industry and the capital expenditure cycle of operators. Operators' capital expenditure will bottom out and rebound in 2018. The communication industry, like other industries, follows the rule of upstream and downstream, infrastructure and product services. From the perspective of management end cloud architecture, the hierarchical development law of basic network first, terminal following, and application and service once again applies to 5G. In this process, the investment entities of the entire 5G industry chain have also changed accordingly, shifting from operators and consumers to vertical industries and enterprise players. We believe that there are three major investment opportunities in the communication industry based on the 5G theme in the future.
Three waves of investment under the theme of 5G
2018 will be the year of 5G. From the perspective of 5G promotion plans in various countries, 5G is expected to achieve network commercialization by 2020. As South Korea plans to showcase 5G technology at the Pyeongchang Winter Olympics in February 2018, 2018 will be the year when 5G moves from standardization to pre commercialization.
Global 5G Promotion Status
China's 5G industry will experience a large-scale demand growth. It is expected that by 2020, the scale of base stations alone in China will reach a market of billions, and the overall prospects of the 5G industry market are very broad. It is expected that by 2030, 5G will drive a direct total output of 6.3 trillion yuan and an indirect total output of 10.6 trillion yuan. And with the further promotion of commercialization, the output structure of China's 5G industry will also undergo a certain degree of transformation, among which the output of 5G information service providers will see significant growth in the future with the popularization of basic 5G infrastructure.
5G is gradually approaching, opening the door to a trillion dollar market.
According to the "Forecast of China's 5G Industry Development Prospects and Analysis of Industry Chain Investment Opportunities" report released by the Forward Industry Research Institute, starting from the official commercialization of 5G in 2020, it is expected to drive about 484 billion yuan in direct output and 1.2 trillion yuan in indirect output that year. By 2030, the direct output and indirect output driven by 5G will reach 6.3 trillion yuan and 10.6 trillion yuan, respectively, with an average annual compound growth rate of 29% and 24%. From the perspective of output structure, in the early stage of 5G commercialization, the income from equipment manufacturers brought by network equipment investment will become the main source of direct economic output of 5G. It is expected that in 2020, the total income from network equipment and terminal equipment will be about 450 billion yuan, accounting for 94% of the total direct economic output.
Future economic output of 5G (trillion yuan)
According to data from the Forward looking Industry Research Institute, it is expected that the total network investment from 2020 to 2030 will reach 411 billion US dollars, approximately 2.8 trillion yuan, which is 3.5 times that of 4G networks. Wei Leping pointed out that in terms of acceptable costs for operators, it is expected that the total network investment from 2019 to 2025 will be 180 billion US dollars, about 122 trillion yuan, which is 1.5 times the investment in 4G networks (about 117 billion US dollars).
Investment opportunities brought about by changes in 5G technology
Based on this calculation, the total investment in China's 5G network construction will exceed 1.2 trillion yuan, roughly in line with the industry's estimated 1.22 trillion yuan. In addition, the gradual maturity and promotion of 5G technology will have a profound impact on the component structure of downstream intelligent terminal RF front-end modules (RFFEM), and the RF front-end of smartphones belongs to personal consumer goods with different driving attributes, which will be separately counted for the terminal market.
The advancement of 5G will greatly accelerate the penetration process of in vehicle networking terminals.
It is expected that the global market for connected cars will reach 350 million units by 2022, accounting for 24% of the market. The sales of new cars with connected functions will reach 98 million units, accounting for 94% of the market. In China, according to statistics from the Institute of Information and Communications Technology, as of August 2017, the number of China Unicom connected car users has exceeded 20 million, China Telecom connected car users have reached 11.06 million, and China Mobile connected car users have reached 27 million.
In addition, a total of 683 car networking terminals in China have obtained network access certificates from the Ministry of Industry and Information Technology, with 2G and 3G car networking terminals being the main ones. 4G car networking terminals have grown rapidly since 2016, increasing from zero to 101 in just over a year. It can be foreseen that car networking terminals based on 4G and 5G will continue to maintain a rapid development momentum in the next 3 to 4 years. At the same time, V2V communication equipment is also expected to leverage the popularity of V2X technology to significantly increase installed capacity. The global sales volume of V2V communication systems is expected to reach 700000 sets in 2017, and the number will increase to 5.6 million sets in 2020, with an estimated breakthrough of 55 million sets by 2025.
In terms of policy, China has made 5G a national strategy. In March 2017, 5G was officially included in the government work report, and China aims to achieve comprehensive leadership from 3G following, 4G parallel to the 5G era; The 13th Five Year Plan emphasizes the active promotion of 5G development and the launch of 5G commercialization in 2020. The government supports the development of 5G, enterprises accelerate research and development, and the global competition for 5G commercialization is becoming increasingly fierce. It is highly likely that 5G commercialization will be fully implemented by mid-2019.
According to the latest news, Tianjin's first 5G base station has been opened at the Tianjin Open Laboratory of China Mobile 5G Joint Innovation Center.
As one of the first batch of 5G application demonstration cities in China, Tianjin's opening of the first 5G base station marks a critical period for the construction of 5G technology testing environment and large-scale network construction in Tianjin.
It is reported that 5G base stations based on advanced 5G technologies such as multi antenna Massive MIMO and newly encoded LDPC/Polar have ultra large bandwidth capabilities, with an experience rate of up to 1Gbit/s, 100 times that of 4G, and a peak rate of up to 20Gbit/s, 20 times that of 4G. This means that in the 5G network environment, high-speed applications such as ultra high definition video live streaming, VR (virtual reality)/AR (augmented reality), and naked eye 3D will be realized.
In addition, the high reliability, low latency, low power consumption, and large connectivity characteristics of 5G will strongly promote various applications such as telemedicine, industrial control, remote driving, smart cities, and smart homes to enter people's lives.
In the future, we will rely on the China Mobile 5G Joint Innovation Center Tianjin Open Laboratory to actively drive 5G technology and business, strengthen open cooperation between upstream and downstream of the industrial chain, strive to build a cross industry integrated innovation ecosystem, and drive local economic and social development.
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