Non-handset 5G device market outlook

Fixed broadband takes a step forward. Industrial & automotive scenario in 2021 onwards.

Compared to LTE, 5G is expected to be used to in broader range of industry. In our recent market report, we have updated the market trend of 5G non-handset application, device, chipset development, and challenges.

Here is the summary of our study on non-handset 5G device market:

• Among non-handset 5G applications, CPE (Fixed broadband) will be the main applications in next 4-5 years
• Industrial 5G module market will start to pick up in 2021-2022. Business model challenge for 5G network operators and service providers
• 5G chipset and module price is the major challenges in early stage of the market
• Huawei introduced low price 5G module and devices during 2019. This may accelerate the 5G diffusion in China

1. Non-handset 5G device market

Followed by the pre-commercial 5G services in 2018, 5G commercial service launched in several countries in 2019. Since eMBB (Enhanced Mobile Broadband) standard has been set ahead of URLLC (Ultra Reliable, Low Latency Communication) and Massive MTC (Machine Type Communication), broadband 5G applications will penetrate first.

Many of 5G network operators initially introduce smartphone and CPE as their commercial 5G device. 5G laptop PC, 5G tablet, or industrial 5G will be commercialized in 2020 onwards.

Industrial applications which requires URLLC is expected to be commercialized during 2022-2023, followed by standardization (2020), network upgrade (2021), and field test.

We forecast total 5G device shipment to reach over 250 million units in 2020, and 915 million in 2024. The aggregated total number of 5G device shipments will reach nearly 3.3billions from 2019 to 2024.

Since eMBB services go ahead to URLLC and massive MTC, smartphone is the primary 5G devices for first 5 -6 years.

We forecast non-handset 5G device market gradually grow in 2020-2021. 5G adoption will expand its application in industrial and automotive field in 2022 onwards. CPE will be the biggest applications of non-smartphone 5G devices, followed by cellular tablet and automotive telematics by 2024. Mobile broadband device (USB data card and mobile router) is relatively small, as mobile router market has been shrunk due to the introduction of smartphone tethering. Cellular notebook PC is niche market, which is only 3-4% of total notebook PC shipments, and mostly used by enterprise users in developed countries. 5G may help increase the cellular adoption in notebook PC market, but we do not expect that it will significantly change.

Strong demand for 5G CPE has been perceived from US and China operators, especially from Verizon Wireless and China Mobile. As a result, several suppliers, including new players, actively develops 5G CPE. On the other hands, wired broadband (FTTx, cable) is highly penetrated in both USA and China. 5G CPE costs (both CPE device and data cost) is more expensive than FTTx. 5G fixed broadband diffusion looks to be restricted, especially in urban areas. We expect 5G CPE mainly deploys in rural areas, assuming accumulate 15-20M of 5G FWA connection in the US during 2019-2024, and accumulate 25-30M in China from 2019 to 2024, respectively.

In China, government and operators promote UHD broadcasting service over 5G. 5G CPE in China is expected to support IP broadcasting service.

As for industrial applications, 5G is expected to be used principally for public safety, infrastructure monitoring, factory automation, robot/drone/heavy machinery control, remote medical, video distribution (entertainment), and so on. We expect 5G adoption in industrial and automotive sector will pick up gradually in 2021-2022, due to the long period of POC, trial, or test. Module price is another challenge for massive adoption of 5G module.

Currently, 5G module suppliers expect CPE, industrial gateway, security (video surveillance), and computer (PC, tablet) to be the major applications in the near term.

2. 5G chipset development

Since huge investment and asset of legacy technologies (2G/3G/LTE) are required, there are less suppliers for 5G modem chipset compared to LTE. There are six 5G modem chip suppliers (Qualcomm, HiSilicon. Samsung, MediaTek, UNISOC and Sanechips) in the market (Apple likely start producing 5G modem chip within 2 years. Additionally, Oppo, GCT Semiconductor may join 5G chip market in the future).

Of these, only Qualcomm, HiSilicon and UNISOC currently provides 5G modem chip to non-handset applications. Actually, for most of device/module suppliers, Qualcomm is the only supplier of 5G modem chip, since Hisilicon currently provides 5G modem only for Huawei. UNISOC 5G modem is still not mature, and has limitation in covering global operator network.

This absence of competition makes 5G device/module cost very expensive in early stage. Price of Qualcomm based 5G module (sub-6GHz) is expected to be around $150-200 in 2020. Meanwhile, Huawei introduced approx. $140 of 5G module based on HiSilicon chipset in 4Q2019. Huawei’s low price 5G module may speed-up 5G adoption in specific countries such as China, where Huawei’s 5G network is widely adopted.

MediaTek and Samsung primarily target smartphone market. They are expected to join non-handset market in 2021 onwards. MediaTek just announced collaboration with Intel for 5G laptop PC, which will be launched in the market in 2021. MediaTek also looks to develop new 5G thin modem for module and CPE market. Samsung is expected to provide 5G modem to automotive market in 2021-2022. Sanechips (former ZTE microelectronics) schedule to launch 5G modem in 2021, aiming for CPE and mobile broadband devices.

We expect that 3GPP Rel.16 compliant 5G modem chip will be commercialized in early 2021. Qualcomm and HiSilicon is likely to be the first group of suppliers of Rel.16 compliant 5G chipset. URLLC in 3GPP Rel.16 is expected to be integrated with 5G eMBB chipset at the beginning, then expected to be designed as a dedicated URLLC chipset in the future.

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