Japan opens wallet to sustain 5G dominance
Industry is facing another challenge after losing out in 5G finished devices
Japanese companies are pouring hundreds of millions of dollars into manufacturing components for 5G telecom equipment, expecting to preserve their dominance after slipping behind Chinese and South Korean competitors in finished smartphones and mobile bases.
5G networks debuted in the U.S. and South Korea this year, offering rates 100 times that of current 4G networks. According to the Fuji Chimera Research Institute, the global market for 5G gadgets, such as surveillance cameras and drones, could top the equivalent of $241 billion by 2023.
Sumitomo Electric Industries will spend 20 billion yen ($184 million) by 2020 to double the potential for antenna parts at production facilities in Yamanashi Prefecture to capture growing demand. Instead of the more typical silicon made of gallium nitride, the products will require less electricity, allowing for smaller, cheaper base stations. Ericsson and Huawei Technologies are among the customers.
Rohm also developed new control semiconductors for turning on and off 5G bases. These are half the size of existing models and can the loss of energy from 7% to 3%. Sample deliveries will start as early as the fall of 2020.
To boost the ability for 5G mobile components, Murata Manufacturing plans to invest more than 10 billion yen over two or three years. It has a share of approximately 50 per cent in LC filters that collects signals from specific frequencies.
“The 5G mobile industry will expand 20 per cent to 30 per cent a year over the next two to three years,” said Senior Executive Vice President Norio Nakajima.
Others are looking at purchases. By December, Kyocera plans to take a 51% stake in Ube Electronics, which has developed ceramic filters for use in 5G bases. The target is mass production as soon as 2020.
In the meantime, Advantest is betting on the 5G boom to increase demand for its chip-testing equipment. April-June orders met original estimates by nearly 15 billion yen for its system-on-a-chip trials.
“When goods become more sophisticated, demand for testing equipment increases,” said an executive from Advantest.
But when an industry undergoes significant change, it’s not unusual for front runners to fall behind. Within the U.S. effort to ban the firm, Huawei is creating its own 5G chips and mobile operating system. Components from domestic sources could be an alternative to Japanese parts.
For smartphones and other finished products, Japanese companies dropped behind the competition as they failed to predict just where the business is going. 5G offers their first check of significance.