This article focuses on the global 5G supply chain. The upstream segments of the 5G industry chain mainly include key materials, chips, radio frequency devices, optical modules, and equipment development. These are not only the foundation for large-scale 5G network construction but also the initial investment areas for 5G industry development. At the midstream level, a comprehensive assessment of the capabilities of major global 5G mobile operators is conducted based on relevant data. The downstream segment, focusing on applications such as smart terminals, high-definition video, the Internet of Things, the Industrial Internet, and the Internet of Vehicles, summarizes and reviews supplier companies in multiple countries and regions worldwide.
I. 5G Upstream Supply Chain Overview
Currently, thanks to the continuous efforts of all parties in the industry, global 5G technology and products are maturing. All links in the industry chain, including raw material design and R&D, chips, systems, terminals, network deployment, commercial pilots, and application expansion, are developing steadily, with R&D and innovation levels continuously upgrading and industry maturity constantly improving. Upstream technologies are maturing, midstream mobile communication operation capabilities are gradually increasing, and downstream terminal and scenario innovation applications are continuously expanding.
The upstream segments of the 5G industry chain mainly include key materials, chips, radio frequency devices, optical modules, and equipment development. These are not only the foundation for large-scale 5G network construction but also the first areas to be invested in for the development of the 5G industry.
1. Key materials for 5G
Against the backdrop of accelerated 5G construction and commercialization, the increased transmission speed and signal strength of 5G communication will lead to greater and higher demands for new 5G materials in hardware applications such as mobile phones, base stations, IoT, and automobiles. This has ushered in a new era for the materials industry in 5G development. The 5G industry will drive trillions of yuan in direct economic output and will also create a huge market for the 5G new materials industry. Generally speaking, new 5G materials are mainly designed to support the high performance of 5G and ensure high reliability, such as polytetrafluoroethylene (PTFE) and liquid crystalline polymer (LCP). Some are designed to alleviate the problems caused by the high power consumption of 5G, such as graphite heat sinks. Specific sub-sectors include key filter materials (microwave dielectric ceramics), high-frequency substrates, mobile phone antenna materials (LCP and MPI), third-generation semiconductor materials (SiC and GaN), mobile phone electromagnetic shielding materials (conductive materials, conductive silicone, conductive cloth pads), and mobile phone thermal conductive and heat dissipation materials (thermal grease, gel, phase change materials), etc.
-Key materials for filters (microwave dielectric ceramics)
In the 3G/4G era, metal coaxial filters became the industry standard due to their low manufacturing cost and mature technology. However, with the emergence of various new wireless technologies, increasingly complex communication systems, and intensive use of radio frequencies, the high suppression of system compatibility issues by metal filters has lost its advantage. Ceramic dielectric materials have become a new focus of industry attention. Especially in the 5G era, based on the requirements of large-scale antenna integration, the miniaturization and integration requirements of filters are becoming increasingly stringent. Ceramic dielectric filters, with their advantages of good frequency selectivity, small size, good operating frequency stability, low loss, and low cost, have become the preferred choice for the mainstream low and medium frequency bands of 5G. From a global supply chain perspective, the US and Japan are the main contributors to the filter materials and devices market. Major suppliers include Avago, Qorvo, Murata, Kyocera, TDK, MURATA, EPCOS, CeramaTec, Trans-Tech, DLI, Rogers, CoorsTek, Morgan ElectroCeramics, and Filtronic.
-High-frequency substrate-
High-frequency substrates are fundamental materials for the high-frequency communication industry, primarily used in PCB (printed circuit board) manufacturing. In the 5G era, due to the involvement of different frequency ranges, including mid- and high-frequency frequencies, higher demands are placed on the frequency selection performance of related devices. Traditional substrate materials struggle to meet the electrical performance specifications of high-frequency communication, resulting in significant signal distortion. Polytetrafluoroethylene (PTFE)/ceramic fillers, thermoplastic/ceramic materials, thermoplastic engineering plastics/ceramic fillers, and LCP are currently the main commercially available substrates. The high-frequency substrate market is primarily dominated by a few manufacturers such as Rogers, Taconic, Nelco, and Isola, and market supply is relatively limited.
Antenna materials: LCP and MPI -
5G communication utilizes a wide range of frequency bands, including low, mid, and high frequencies, placing higher demands on antenna performance, particularly regarding high-frequency loss. This presents a significant challenge to traditional copper and alloy antennas. While PI (polyimide) films were initially used in 4G antennas, their losses became significant above 10GHz, clearly failing to meet the demands of 5G communication. LCP (liquid crystal polymer) is increasingly gaining attention as a new area of focus for 5G antenna materials due to its lower meson and conductor losses, flexibility, and sealing properties. Currently, LCP manufacturing processes are complex and development costs are relatively high. MPI (modified polyimide), a modified material for traditional PI flexible circuit boards, offers performance close to LCP in the frequency range below 15GHz, and boasts a price advantage, making it a potential mainstream choice for early 5G antenna materials. However, with the continuous maturation of R&D technologies, the industry generally believes that MPI antennas may only be a transitional technology, with LCP antennas becoming the dominant market in the future.
From a global industry perspective, the LCP market is almost entirely dominated by the United States and Japan. Currently, US, Japanese, and South Korean manufacturers hold a dominant position in the LCP materials industry. Specifically, products from US-based Celanese-Ticona, Japanese companies Polyplastics, and Sumitomo Chemical account for approximately 75% of the global market share. MPI antennas primarily use electronic-grade PI film. Due to the high technological barriers and unique material properties of PI film, the main suppliers with strong overall competitiveness are still overseas companies, including DuPont, Ube Industries (Japan), Kaneka Chemicals, and SKCKOLONPI (South Korea). These companies essentially monopolize the market for high-performance polyimide films above electronic-grade polyimide film.
-Third-generation semiconductors-
The research and development of high-frequency communication technologies and equipment in the 5G era places higher demands on radio frequency devices, creating development opportunities for third-generation semiconductor materials that support high-frequency performance, high voltage resistance, and high temperature resistance. Currently, the industry is focusing on silicon carbide (SiC) and gallium nitride (GaN), which have become important choices for 5G communication equipment. Looking at the long-term development trend of the industry, 5G communication frequencies can reach up to 85GHz, a frequency band where GaN can leverage its advantages, making GaN a potential key material for 5G base station construction.
Silicon carbide (SiC) substrates are the foundational material for the third-generation semiconductor industry. Currently, related applications are maturing and have entered the industrialization stage. The industry chain mainly includes single-crystal materials, epitaxial materials, devices, modules, and applications. Among these, single-crystal silicon carbide materials are the foundation and key development direction of the industry. Currently, the technologically mature materials mainly include conductive substrates and semi-insulating substrates. Core technologies and leading companies in the market are mainly concentrated in developed countries and regions such as Europe, the United States, and Japan, with the United States holding a dominant position. In 2018, the United States accounted for more than 70% of global silicon carbide wafer production, with CREE accounting for more than 50%. Domestic companies in China are gradually mastering the manufacturing technology of 2-inch to 6-inch silicon carbide crystals and wafers, and are in the stage of gradually narrowing the technological gap with developed countries.
GaN boasts a wider bandgap, making it a promising candidate for applications in microwave RF devices (communication base stations, etc.), power electronic devices (power supplies, etc.), and optoelectronic devices (LED lighting, etc.). Currently, GaN suppliers are primarily overseas companies, mostly concentrated in European countries and Japan. Looking at the supply chain, major suppliers of silicon substrates include Siltronic (Germany), Sumco (Japan), and ShinEtsu (Japan). Suppliers of silicon-based GaN epitaxial wafers include NTT-AT (Japan), EpiGaN (Belgium), and IQE (UK). Some manufacturers extend their reach across the supply chain, producing both epitaxial wafers and manufacturing devices, aiming to become comprehensive device and service providers, such as Episil and Fujitsu.
-Electromagnetic shielding materials-
5G smart terminals are showing a trend towards high integration, modularization, and componentization. Various devices and chips are becoming smaller and denser, leading to increasingly severe internal electromagnetic interference. Electromagnetic shielding materials have become a new focus of attention in the 5G industry. The electromagnetic shielding material industry chain includes upstream basic raw materials (plastic granules, silicone blocks, metal materials, fabrics, and others), electromagnetic shielding materials (conductive materials, conductive silicone, conductive cloth, and others, absorbing materials, beryllium copper); midstream electromagnetic shielding devices; and downstream end users.
In terms of global supply, international companies currently have a first-mover advantage in raw materials and customers, and have formed a relatively stable market competition pattern. For example, in the field of graphite thermal conductivity, well-known electromagnetic shielding companies include 3M, Laird, Golgi, Berger, Nitto, etc., and the industry and market concentration is relatively high.
-Thermal conductive and heat dissipation materials-
With the large-scale commercialization of 5G, new products such as the Internet of Things (IoT), connected vehicles, and the Industrial Internet will possess characteristics such as high heat flux density, high power, and ultra-thin design, placing higher demands on thermal conductivity and heat dissipation materials. Taking 5G-era smartphones as an example, the integration and density of chips, modules, and devices have increased significantly, leading to a substantial increase in device power consumption and heat density. Therefore, novel thermal conductivity and heat dissipation materials have become a key research area. In this niche market, American, European, and Japanese companies hold a dominant market position in the international and domestic mid-to-high-end markets.
2. Chip
Chips are a crucial element of 5G's core competitiveness, characterized by high technological barriers and long development cycles. Especially since 5G chips are not just for smartphones, but also require the development of compatible chips for various smart devices based on the goal of the Internet of Things (IoT). Possessing core chip technology is equivalent to obtaining a key to the IoT. 2020 marked the first year of 5G commercialization, intensifying competition in the chip market. Globally renowned manufacturers launched various chips. For example, Qualcomm's third-generation 5G baseband chip, the X60, is the world's first 5-nanometer process baseband chip, supporting key 5G frequency bands including sub-6GHz and millimeter wave, which is beneficial for operators to actively conduct network verification testing.
From the perspective of supply chain companies, Qualcomm (USA), Huawei (Mainland China), Samsung (South Korea), Unisoc (Mainland China), Intel (USA), and MediaTek (Taiwan) are all globally competitive companies, all launching baseband chips between 2018 and 2020. Qualcomm, leveraging its traditional strengths in R&D and innovation, has maintained an absolute advantage of 40% to 50% global market share in recent years. Well-known terminal manufacturers such as Xiaomi, Vivo, and OPPO all have partnerships with Qualcomm, demonstrating a clear market concentration characteristic among leading companies.
3. Radio frequency devices and optical modules
The radio frequency (RF) front-end modules/RF devices in 5G mobile terminals mainly include power amplifiers (PAs), duplexers, RF switches, filters, and low-noise amplifiers (LNAs). This is also an important part of the early R&D investment in 5G. In the 4G era, the cost of RF front-end modules/RF devices was about $10, in the 4.5G era it was close to $20, and in the 5G era it will exceed $50, which is four times that of 4G. This has become one of the high-value and highly competitive links in the 5G industry chain.
In recent years, with the advancement of 5G commercialization, the market demand for RF front-end modules/RF devices has been continuously increasing. According to statistics from Yole, the mobile phone RF front-end market size will exceed US$35 billion in 2023, with a compound annual growth rate (CAGR) of 14%. Looking at specific segments, filters will have the largest market share, reaching US$22.5 billion, with a CAGR of nearly 20%; followed by power amplifiers, with a market size of US$7 billion and a CAGR of 7%, indicating expanding competition potential in the high-end product market; RF switches will reach US$3 billion, with a CAGR of 15%; antenna tuners will reach US$1 billion, with a CAGR of 5%; and low-noise amplifiers will reach US$602 million, with a CAGR of 16%.
The global RF front-end module/RF device industry is highly concentrated, with leading companies from the US and Japan exhibiting strong competitiveness. In the power amplifier sector, Skyworks, Qorvo, and Murata hold the vast majority of the global market share, with leading manufacturers Skyworks, Qorvo, and Broadcom employing the IDM (Integrated Device Manufacturer) model. Wafer foundry models are also emerging, primarily represented by companies like Win Semiconductors from Taiwan. In the filter sector, the top five global SAW filter manufacturers are Murata (47%), TDK (21%), Taiyo Yuden (14%), Skyworks (9%), and Qorvo (4%), accounting for a combined 95% of the market. The top three global BAW filter manufacturers are Broadcom (87%), Qorvo (8%), and Taiyo Yuden (3%), accounting for a combined 98% of the market.
The optical module industry is highly concentrated. Key electrical chips in optical modules, such as coherent devices and modem chips, are manufactured by companies including Macom, Semtech, Sillconlabs, and Maxim. Manufacturers of optical components (lasers and detectors) include Sumitomo, Mitsubishi, Lumentum, Oclaro, and Neophotonics. Globally renowned companies in the optical module industry include Finisar, Broadcom, Avago, and SourcePhotonics.
4. Equipment Development Stage
Main equipment is a key component of the 5G communication industry chain, characterized by large-scale investment and high technological barriers. Investment in main equipment typically accounts for about 50% of the total investment, and mainly includes wireless, transmission, core network, and bearer equipment.
-Base stations and transmission equipment-
Base stations are a crucial component of 5G infrastructure construction. According to GIV's forecast data, by 2025, the number of 5G base stations deployed globally will reach 6.5 million, providing services to 2.8 billion users, representing nearly 60% of the population. Currently, the main global 5G equipment vendors include Ericsson, Huawei, and Nokia, and the competitive landscape has largely stabilized. In April 2020, research firm Brand Finance released its annual report, "Telecoms 150 2020," which comprehensively evaluates the world's ten most valuable and ten most powerful telecommunications infrastructure brands.
In September 2020, market research firm Dell'Oro conducted a survey of the global telecom equipment market in the second quarter of 2020 and assessed the overall competitiveness of well-known telecom equipment vendors. The report indicated that from 2019 to the first half of 2020, the top seven global telecom equipment vendors were Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung. The report analyzed that based on the promotion of 5G commercialization, network construction, and deployment in my country, Huawei and ZTE maintained a good growth trend in the market. In December 2020, Dell'Oro continued to track and release its global telecom equipment market report for the third quarter of 2020, studying the global broadband access, microwave and optical transmission, mobile core network and radio access network (RAN), SP routers, and carrier Ethernet switches (CES) markets and equipment vendor supply. The report again ranked telecom equipment vendors, with the top seven companies remaining unchanged from the second quarter: Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung.
-antenna-
While the investment ratio in base station antennas is not high, their impact on network indicators within base station communication systems is enormous. The number of base stations in the 5G era is 1.5 to 2 times that of 4G, and this increase in base station numbers creates a huge market opportunity for base station antennas. It is estimated that the global base station antenna market size in the 5G era could reach 700 billion yuan. Currently, the RF antenna market is highly concentrated, and the competitive landscape is relatively stable. Traditional antenna manufacturers such as Huawei, Catherine, and CommScope hold more than 50% of the global market share, in addition to Amphenol, Amphenol, Comba, Tongyu, and Mobi.
II. Midstream: Mobile Operation Services
Currently, the midstream of 5G primarily involves mobile operation services. According to the latest statistics from the Global Mobile Suppliers Association (GSA), as of December 2020, a total of 140 operators in 59 countries/regions worldwide announced the launch of commercial 5G networks. In August 2020, Brand Finance, a well-known UK brand valuation agency, released the "Telecoms 150 2020" ranking of the world's 150 most valuable telecom brands.
Furthermore, in terms of regional operator investment, according to statistics from the Global System for Mobile Communications Association (GSMA), from 2020 to 2025, mobile operators in the Asia-Pacific region will invest US$331 billion in 5G network deployment, accounting for more than 80% of the total network investment. This region is the most developed in 5G network deployment. Among them, Chinese operators will invest more than US$160 billion in their 5G networks, accounting for 90% of the total network capital expenditure.
III. Downstream: Terminals and Application Scenarios
With the continuous maturation of upstream and midstream 5G technologies and the accelerated development of downstream applications, a series of achievements have been made in fields such as smart terminals, high-definition video, the Internet of Things, the Industrial Internet, and the Internet of Vehicles.
-Smart Terminal-
5G, as a fusion of communication technology and emerging technologies such as artificial intelligence, is bringing about a new ecological transformation to the traditional terminal industry, with ubiquitous intelligent terminals becoming a new development trend. While smartphones remain the most important terminal form in the 5G industry ecosystem, they will enable the widespread adoption of a wider range of terminals, including VR (Augmented Reality) devices, smart hardware, IoT devices, headsets, hotspots, indoor/outdoor CPEs, laptops, modules, drones, and robotic terminals. The market space is gradually expanding, with enormous development potential. According to GSA statistics, as of the end of 2020, 559 5G terminal devices had been released globally, with 335 already commercially available. Mobile terminals accounted for nearly 50% of these, representing the aspect consumers are most concerned about in the practical application of 5G. IDC data shows that in 2022, 5G mobile phone shipments will account for nearly one-third of all smartphone shipments.
According to IDC's Q4 2020 Worldwide Mobile Phone Market Tracker, the top five smartphone manufacturers by sales figures are Samsung, Apple, Huawei, Xiaomi, and Vivo.
In the 5G smartphone sector, according to the latest statistics from SA, leading companies in the global 5G smartphone market in 2020 include Huawei, Apple, and Samsung. Huawei sold 79.6 million 5G phones, with a market share of nearly 30%; Apple sold 52.3 million 5G phones, accounting for 19.2% of the global market share; and Samsung sold 41 million 5G phones, with a global market share of 15.1%.
-High-definition video-
High-definition video is one of the killer applications of 5G, with enormous potential for expansion in the global video market and a large customer base. Globally, Japan plays a leading role in the development of the ultra-high-definition video industry, possessing strong competitiveness across all segments of the 4K and 8K industry chain. It is a global leader in ultra-high-definition front-end equipment, broadcasting, and applications, and its production capacity and quality of 4K/8K image sensors, high-end optical lenses, and in-camera optical components are globally competitive. Companies like Sony, Canon, Nikon, Panasonic, and Hitachi demonstrate significant industry leadership. In recent years, South Korea's ultra-high-definition industry has also developed rapidly, primarily focusing on high-end panels, with companies like LG Display and Samsung possessing strong innovation capabilities.
-Internet of Things-
The Internet of Things (IoT) is a key application scenario for the later stages of 5G deployment, primarily encompassing consumer-grade IoT and industry-grade IoT. Based on extensive and in-depth industry research on 5G, this report summarizes and analyzes scenarios including VR/AR, connected vehicles, smart manufacturing, smart energy, wireless healthcare, wireless home entertainment, connected drones, social networks, personal AI assistance, and smart cities. In recent years, a number of "5G + IoT" scenarios have been implemented, such as 5G smart home labs, smart + 5G interconnected factories, and 5G + telemedicine, leading to continuous improvement in the maturity of the industry chain. The IoT market has enormous expansion potential in the 5G era. According to IDC statistics, global shipments of IoT cellular communication modules will reach 1.25 billion units in 2023, with 2G IoT modules gradually being replaced by 5G and non-standard modules.
From a global supply chain perspective, according to the "World's Top 500 IoT Companies" ranking released in December 2020, Huawei, IBM, China Mobile, Qualcomm, Intel, CASICloud, China Unicom, Rostelecom, nfineon, and Nokia ranked in the top 10.
-Industrial Internet-
According to data from the "Global Industrial Internet Platform Innovation and Development White Paper (2018-2019) Summary," the global industrial internet platform market is experiencing rapid growth, projected to reach $13.82 billion by 2023, with a compound annual growth rate exceeding 30%. The United States, Europe, and the Asia-Pacific region are the three core areas of industrial internet development. Among them, the United States and Europe have superior overall strength, while the Asia-Pacific region has significant growth potential. Currently, the United States has a clear advantage in industrial internet development, with leading companies demonstrating a strong demonstration effect. In March 2014, companies such as GE, AT&T, Cisco, and IBM established the Industrial Internet Consortium (IIC) to comprehensively promote the standardization and pilot demonstration of industrial internet technology in their respective countries. In recent years, giants such as GE, Microsoft, Rockwell, and Amazon have actively carried out industrial internet pilot demonstrations, further helping the United States maintain its industry dominance. Europe's industrial internet deployment is following closely behind, with a number of industrial giants, including Siemens, Bosch, ABB, and SAP, leveraging their own manufacturing advantages to widely implement industrial internet demonstration projects. The Asia-Pacific region is in a stage of narrowing the gap and further accelerating its progress.
In October 2020, Gartner released the "2020 Magic Quadrant Report for Industrial Internet Platforms," which included companies such as Amazon Web Services (AWS), Braincube, Microsoft, Samsung SDS, Alibaba, AVEVA, FORCAM, and Haier in the list of new and well-known suppliers in the global industrial internet sector, based on indicators such as execution and vision completeness.
-Connected Vehicles-
Currently, the global connected vehicle industry has entered a new stage led by informatization and intelligentization, with enormous market potential. In North America, the connected vehicle industry is primarily driven by enterprises, with market forces propelling industry and technological innovation. Leveraging its information technology advantages, North America leads the development of intelligent connected vehicles, and Silicon Valley boasts numerous startups. Europe possesses world-leading automotive companies and intelligent driving technologies, with leading companies demonstrating significant transformation and upgrading effects. Various countries are focusing on cultivating connected vehicles and other new technologies as core future competitiveness, with governments actively increasing R&D investment and accelerating the overall development of the connected vehicle industry in the region. Asia, relying on its market advantages and advanced transportation infrastructure, is steadily advancing the development of intelligent connected vehicle technology, with huge market growth potential.
