Tuesday, 21 July 2020

COVID-19 Impact on 5G Infrastructure Market | The impact on Ericsson & Nokia will be high as the majority of these vendors have 5G contracts in US & European countries

Post COVID-19, the "COVID-19 Impact on 5G Infrastructure Market by Communication Infrastructure (Small Cell and Macro Cell), Core Network Technology Type (SDN and NFV), End-User (Commercial, Residential, Government, Industrial), and Region - Global Forecast to 2025" size is estimated to grow from USD 12.6 billion in 2020 and projected to reach USD 44.9 billion by 2025, at a CAGR of 29.0%. The projection for 2025 is estimated to be down by 22.7% as compared to pre-COVID-19 estimation. The major factors driving the growth of the 5G infrastructure market include an exponential rise in data traffic, the need for high data transfer speed with low latency, rising adoption of IoT devices, and increasing adoption of M2M connections across various industries. However, supply chain disruptions, delay in the release of 5G specifications, and China-US trade war will result in lower market projection compared to Pre COVID-19 estimation.
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“Telecommunication authorities of several countries have postponed the 5G spectrum, which will delay 5G rollout plans thereby affecting the 5G infrastructure market.”

Several telecommunication operators and government authorities have delayed the 5G rollout plans and spectrum auction. For instance, in India, DoT (Department of Telecommunication) has postponed 5G spectrum auction to next year. On 17 February 2020, Brazilian telecoms regulator Anatel launched a public consultation to discuss the rules of 5G spectrum auction, which was scheduled to be held in March but is delayed due to COVID-19. This is adversely impacting the 5G rollout plans of telecommunication operators.

Key Market Players

Some of the major players in the 5G infrastructure industry are Ericsson (Sweden), Huawei Technologies Co., Ltd. (China), Nokia Networks (Finland), Samsung Electronics Co., Ltd. (South Korea), and ZTE Corporation (China), among others. These players account for the majority of the global 5G infrastructure market share.
The impact of COVID-19 on Ericsson and Nokia will be high as the majority of these vendors have 5G contracts in the US and European countries. In 2020 and 2021, the majority of the market will be driven by the aggressive 5G rollout plans by Chinese telecommunication operators. These telecommunications operators mainly prefer domestic vendors instead of Nokia and Ericsson. The majority of the 5G contracts released by Chinese telecommunication operators have been offered to Huawei and ZTE, with a remaining few to Nokia, Ericson, and Samsung.
“5G macro cell-based communication Infrastructure market to generate the highest revenue between 2020 and 2025.”
Macro cells provide radio coverage for cellular networks and comprise the bulk of 4G/5G data traffic. Though macro cell sites are costly to deploy, they generate a higher average gross margin compared with small cells since one macro cell can cover several small cells. The impact of COVID-19 on macro cells sales is expected to be high as operators are seeking to minimize their capital spending to remain in the growth stage. However, the COVID-19 crisis has made end-users realize the true value of automation, IoT, and digitalization, who are now anticipated to increase their focus on implementing 5G wireless technology across their facilities, leading to the aggressive deployment of macro cells during 2020-2025.
“Industrial end-user to have the highest CAGR in the 5G infrastructure market during the forecast period.”
The industrial market is estimated to grow at the highest rate because of the growing demand for process automation in various manufacturing and process industries. 5G networks will become mainstream in industrial facilities for multiple applications. To efficiently collect, store, manage, and analyze the data generated by connected devices, a robust communication network infrastructure such as 5G will be needed to facilitate communication between IoT devices.
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