CONNECT WITH US

The 5G revolution: A catalyst for semiconductor success

Sponsored content

Global telecommunications companies are continuing the race to deploy the best 5G networks and technologies around the world. Though the coronavirus has pushed the 5G rollout back by 3-6 months, companies are now prioritizing capacity allocation to 5G production as they ramp back up.

The rollout has been long anticipated as the gateway into the Internet of Things connectivity, low latency and high speeds, the outcome of which will be a massive boom in the semiconductor industry.

With the 5G network being the catalyst to multiple technological revolutions, new devices containing higher performing components will be essential requirements of 5G. All new chips, wafers, memory and storage components will be necessary in making 5G a working reality, resulting in large capital investments into manufacturing.

According to Tony Leong, Fusion Worldwide's Director of Business Development, Asia, "From FPGA and Active ICs to Passive and Transformers, the 5G network has brought about a re-generation of components to meet the specification required."

Due to the global shutdown caused by the coronavirus, there is currently an adequate level of inventory. But, as production restarts, chip makers are prioritizing components that support 5G technologies. Thus, backlogs are expected, which are expected to produce some level of supply tension along the way.

Some key manufacturers are already increasing their prices and lead times on components. According to Electronics Sourcing, DRAM selling prices are expected to increase by 12% while NAND flash average prices have been predicted to rise by 19% as OEMs transition to 5G-based systems.

Because key ICs, such as FPGAs, RF Transceivers, SRAM, and NAND, are commonly used in multiple applications, manufacturers will need to increase production once 5G equipment starts being produced. Therefore, pressure will be added to existing supply and lead to further price increases.

MLCCs are another key component that will be impacted by the 5G rollout. After the major MLCC shortage in 2018, speculation has been growing that there will be another shortage this year partly due to the next generation of smartphones and automobiles.

"With the ramp up in production of 5G components and products, we are expecting added pressure on existing MLCC supply, as well as an increase in pricing for these components," Leong continues.

Current market forecasts call for 1.4 billion smartphones to ship worldwide. If shipments exceed just slightly to 1.5 billion units, this would represent a demand increase of MLCCs amounting to 120 billion units. Once demand picks up, shortages will be wider spread moving forward.

Because the rollout will act as the catalyst for many technological revolutions, the 5G industry will lead to a new era of a global networking. Already a IHS Markit report shows that the global 5G value chain will enable US$13.2 trillion in economic output by 2035 and the investment of US$235 billion annually on average to the expansion and strengthening of 5G networks and infrastructure.

This will have a downstream effect on semiconductor sales for years to come and will result in a new level of market growth for the industry.

The 5G revolution: A catalyst for semiconductor success

The 5G revolution: A catalyst for semiconductor success

DIGITIMES' editorial team was not involved in the creation or production of this content. Companies looking to contribute commercial news or press releases are welcome to contact us.