The four major markets of "consumer", "5G telecommunication network", "enterprise network" and "data center" will drive the growth of the global communications market in 2021.
What is the network communication industry?
Network communication refers to a network formed by various communication devices through various transmission media, wired or wireless, to transmit messages and data.
Market momentum of the network communication industry:
The Market Intelligence & Consulting Institute (MIC) of the Council of Information Technology looks forward to the development of the global communications industry in 2021 and anticipates the four major ones: "consumer end (such as smartphones)", "5G telecommunication network", "enterprise network" and "data processing center," will drive the growth of the global communications market in 2021. The estimated output value will grow by 8.1%, reaching US$613.3 billion, of which mobile devices account for about 70%. Although the sales volume of smartphones in 2020 will be affected by the epidemic, and the global shipment situation is not as good as in previous years, the market is expected to grow by 9% in 2021, with shipments reaching 1.35 billion units. For 5G mobile phones, 230 million units will be shipped in 2020, with a penetration rate of 18.4%. Among them, the Chinese market accounts for more than 60%. The top three 5G mobile phone brands are Huawei (33%), Apple (31%) and Samsung (13%) and it is predicted that 5G mobile phone shipments will reach 540 million units in 2021, with an annual growth rate of 136%.
The MIC estimates that the output value of Taiwan’s telecommunications industry (including the export of telecommunications components) will reach NT$3.3 trillion in 2021. As important international customers were pulling goods in advance in 2019 and 2020, Taiwan’s telecommunications industry was affected by the US-China trade war in 2020. The impact of the epidemic was relatively small, but in 2021, due to the decline of some customers' OEM orders for mobile communication devices, the effect of large mobile phone manufacturers has receded, and the estimated growth rate will decline by 5.5%.
Wi-Fi 5 and Wi-Fi 6 shipments will enter an intersection in 2021, and the market will be replaced by Wi-Fi 6. Wi-Fi 6 will become the main growth momentum of Taiwan’s communications industry in 2021, driving the growth of the wireless communications sector 4.8 %. In the field of mobile communications, 5G CPE terminals can be expected to increase, and the proportion of global foundry production of 5G has grown significantly compared to the 4G generation.
There are three key trends in the communications industry in 2021. The first is smartphones. The United States continues to tighten control on Huawei. After Huawei loses the mobile phone market, a new situation in the global landscape will inevitably occur. MIC said that the key point will be whether Apple actively develops low-priced models. If Apple supports local supplies in China, the chain will have a negative impact on the revenue performance of Taiwan’s mobile communications industry. On the other hand, as 5G supports large bandwidths, screens, lenses, artificial intelligence, and other product functions and software and hardware specifications continue to upgrade, Taiwan’s communications industry in 2021 can still expect the demand for mobile phones to be replaced by 5G phones business.
The second key is the commercialization of 5G in South Korea. Since the commercialization of 5G in South Korea in April 2019, 5G has contributed to the revenue of telecom operators, and the 5G applications provided by telecom companies, such as high-quality audio-visual AR/VR, cloud game services, are available the opportunity brings higher traffic and service volume than 4G users. In addition, European and American mobile telecom companies will accelerate the construction of 5G networks in 2021, and open the Internet, private networks, and marginal computing. The promotion of market enthusiasm will be another focus of 5G. The third key is the field of Netcom. The focus of observation is that fixed-line service providers continue to expand the construction of FTTH networks, promote 1Gbps+ home services, and introduce a new generation of 10G PON networks; in addition, 5G networks will drive the rapid development of the 25G optical fiber field in the future. The demand for related Netcom equipment such as enterprise end and data center is expected to show positive performance.
Trends of the network communications industry
Trend 1: New 5G commercial architecture-operators enter 5G SA and explore new 5G charging models
Over 50 telecom operators in 27 countries around the world have deployed 5G networks. The main deployment architecture is Non-standalone (NSA) 5G NR networking. MIC pointed out that Standalone (SA) 5G NR architecture will play an important role in the realization of next-generation innovative applications such as smart manufacturing, smart medical, and smart transportation. Starting in 2020, China’s operators and South Korea’s telecom operators will deploy 5G SA networks. In addition, the new 5G charging model is also very important. Telecom operators will further consider how to design diversified and diversified designs based on the three major 5G features. The customized tariff plan has stable revenue for the B2C general consumer market, while in the B2B commercial field of 5G vertical applications, it expands revenue through a more flexible commercial model.
Trend 2: The smartphone market grows again - 5G mobile phone shipments drive the smartphone market to grow again
In the past two years, smartphone market shipments have fallen into recession, and the development of 5G mobile phones has led to a wave of 4G mobile phone replacements, driving the smartphone market to return to growth. According to the forecast of MIC, the 5G mobile phone shipments will reach 540 million units in 2021. With the upgrade of 5G component specifications, the semiconductor, radio frequency components, heat dissipation, circuit boards, passive components, antennas, and memory industries will grow substantially. The number of 5G users in the China market is expected to become the world's number one, and its telecom companies are also preparing to promote the growth of 5G users. However, the trade war has gradually reduced the supply chain between China and the United States. It is expected that the supply chains of Taiwan and Japan will benefit from it.
Trend 3: Competing for license-free spectrum coverage and high-speed requirements, the 6GHz frequency band attracts attention
The 1GHz-6GHz IF resource has the advantages of high capacity, good coverage, etc., which has attracted the attention of the communication industry. Among them, 6GHz will soon be the main target. Not only is the Wi-Fi camp vigorously striving for the 6GHz frequency band as the basis for the next generation of high-speed Wi-Fi technology, but mobile communications companies also regard 6GHz as a key spectrum resource and expect to support 5G network deployment with 6GHz. The International Telecommunication Union (ITU) has accepted the proposal of China and other Asian countries to carry out related research on the use of 6GHz as a mobile broadband frequency band.
Trend 4: A new realm of fixed-mobile convergence (FMC) - Fixed-mobile convergence is included in the R16 standard to assist 5G construction
At present, 5G construction is facing many difficulties in implementation, and regaining the fixed network and mobile network architecture can help operators use fixed network resources to create diversified network transmission solutions, support network slicing applications, reduce construction capital expenditure, and share all network resources. Based on past research, 3GPP, broadband forum, global operators, equipment manufacturers, etc. have joined hands to jointly formulate 5G FMC work projects, including core network service agreements, transport layer interface integration, and terminal equipment sharing, etc., which are included in the 5G R16 standard.
Trend 5: Next-generation PON evolution—XG-PON spreads and popularizes, and the next-generation standard is under development
With the explosion of IP traffic and the continuous commercialization of 5G, the demand for large-bandwidth applications drives the upgrade of broadband networks, providing new market opportunities for PON. The fault tolerance, reliability, and scalability of the next-generation PON have been improved, and it has been expanded to be applied to corporate networks or mobile communication base station access networks. WDM-PON can be smoothly upgraded through XG-PON/XGS-PON, which is a cost-benefit. China regards the N×25Gbps WDM-PON system as the best technology for 5G network applications, and actively promotes ITU-T to standardize the 25G WDM-PON architecture.
Trend 6: High-speed switch upgrades—5G applications drive computing demand and drive switch shipments
With the rapid development of cloud applications and global communications entering the 5G era, it is expected that 5G applications will drive computing demand. In the 5G network, applications such as multiplayer cloud gaming, AR/VR, smart manufacturing, and V2X supported by low latency and the Internet of Things will drive the demand for decentralized computing and storage, especially the edge computing market that attracts the most attention and assists the network. The equipment market is growing. The establishment of micro-data centers and ultra-large-scale data centers will directly promote switch shipments. The mainstream 100G penetration rate continues to increase, and 400G switch products have also begun to be shipped to data center operators, which is now more forward-looking, as the technology above 800G is also under development.
Trend 7: Wi-Fi New Regulations Exhibit Tentacles - New Specifications Formulate, Fully Layout of Networking Business Opportunities
Major smartphone manufacturers such as Apple and Samsung have adopted Wi-Fi 6 one after another, and chip vendors have also incorporated it into the mobile communication SoC architecture, which is expected to accelerate the speed of popularization. Looking at the future networking market, IEEE and related industry players have begun to formulate new specifications, with the goals of high speed, low latency, and low power consumption, and formulate the following generations of car networking communication 802.11bd, optical wireless transmission 802.11bb, green IoT communication 802.11ba and the precise positioning application 802.11az and other specifications will be completed in 2020 and ready for commercial use. It is expected to meet various networking needs and strive for new business opportunities in the Internet of Things era.
Trend 8: Service Transformation of Operators - New Type of Service Promotes Operational Growth
MIC pointed out that the revenue of traditional communications has declined, and operators are transforming through services, such as providing a new type of film and television hyper-aggregation platform, lightweight solutions, and new advertising models to add momentum to the original business and drive through innovative services. Revenue growth. For example, Comcast and AT&T, the transformation of innovative film and television services is beneficial to consolidate existing users, and open new business income such as agency collection and advertising. Another trend in the transformation is advertising strategy. Through cooperation with manufacturers in various fields, creative short film advertisements are launched in each of its subsidiaries. The website not only stimulates demand for services such as e-commerce, monthly subscription, etc. but also indirectly leads to advertising revenue and customer trust.
Trend 9: Mobile Newsletter Evolves Again - Operators try to recapture the multimedia communications market with RCS
The dynamics of RCS joining the multimedia communication market in 2020 are worthy of attention. The MIC pointed out that in the 4G era, the rise of network communication software has caused serious erosion of SMS and voice service revenues. Mobile operators use RCS to develop and network communication software. The SMS service with the same function attempts to restore the market, grasp user information, and provide accurate advertising to increase revenue. Although RCS is strongly promoted by Google, it has also opened a new battlefield for the benefits derived from the huge back-end user data. Among them, mobile operators and Google have launched a service dominance battle.
Trend 10: Netcom industry mergers and acquisitions - independence and new growth demands drive the consolidation of the Netcom industry
The U.S.-China trade war continues to ignite, and Netcom manufacturers are responding to the rapidly changing international trade environment through their supply chain layout. According to the MIC, China Netcom manufacturers are attempting to establish a more complete local supply chain system through mergers and acquisitions of international upstream key component manufacturers and at the same time deepen cooperation with China manufacturers. Related cooperation and mergers and acquisitions are expected to continue after 2020. In addition, under the trend of existing products gradually entering the mature stage, international Netcom manufacturers, in addition to continuing to strengthen their existing advantages, related businesses, mainly communications chip manufacturers, are focusing on expanding their future through existing business cutting and mergers and acquisitions, such as automotive and corporate in new areas such as applications, the results of mergers and acquisitions are expected to begin to ferment in the future.