Nouriel Roubini has sounded warnings for the next two years. Several days ago, when I attended an industry gathering, a friend of mine also lamented that there was too much inventory too clear. But I always think that the winners and losers in the semiconductor industry are decided during recession.
At the end of the oil crisis in the 1970s, Japan replaced the US as the world's strongest supplier of memory. After 2022, Taiwan may be a relatively competitive economy, apart from those countries that supply raw materials. If there is a recession in the next two years, what are the business opportunities that we should pay attention to?
5G has entered the stage of large-scale use, and 500 telecom companies around the world have already launched commercial 5G services. Open RAN is a major focus. According to DIGITIMES Research, China had 511 million 5G users as of the end of first-half 2022, which means that nearly half of China's Internet users were already using 5G networks.
To meet user demand, a total of 430,000 5G base stations were deployed in China in the first half of the year. As of mid-2022, the cumulative total number of base stations in China reached more than 1.85 million, which is not far from the plan of 2.09 million by the end of 2022. It is estimated that China's 5G base station deployment plan will meet the target.
In addition to China, the US and Japan also have many 5G users. Telecom companies are actively trying to get a head start in the greenfield, and some of them are early adopters. For example, Japan's Rakuten Mobile has launched Rakuten Symphony to provide system integration services; Docomo has integrated three companies to establish the Docomo Ecosystem; the US has seen Dish and others actively laying out their plans; Europe is hoping to have its own Open RAN operating standards.
Taiwan may not be involved in the development of standards, but there are still many opportunities for networking products. In addition to Intel and Xilinx providing server and radio chipsets, the most noteworthy is Samsung Electronics, which has taken advantage of Huawei's withdrawal from the 5G base station market. Samsung's outstanding performance in both hardware-software integration and radio products is good for the Korean giant amidst setbacks in memory and handset products.
However, Open RAN does involve national security issues, and both China and the US have their own stances on this issue. Their respective open-source alliances do not welcome participation by core companies from the other side. Looking at the Open RAN market opportunities, we can clearly see a G2 (the US vs China) structure, and Taiwan is obviously not a priority choice of the Chinese government.
Sun Tzu's "Art of War" warns against attacking when the morale of your enemy is running high, and against swallowing baits offered by the enemy. Basically, Taiwanese companies can fully embrace the business opportunities in Europe and the US market; but for the business opportunities in China, they may have to adopt flexible tactics, and be keenly aware that they may have to retreat at any time.
