China faces delay in 5G mobile network due to coronavirus

China is facing delay in the rollout of 5G mobile networks, a key technology initiative for the country’s leadership, due to the spread of the coronavirus.
Coronavirus ChinaTenders for six big 5G projects have been postponed since Jan.31, government records show, Reuters reported. They include an industrial internet project in Guangdong province, a hospital-related project in Jiangxi province, and a police-related project in Gansu province.

Two leading providers of crucial fiberoptic cables also have headquarters and key production facilities in Wuhan city, the epicenter of the outbreak which is still under lockdown.

5G smartphone industry

The 5G smartphone industry is growing quickly, but the coronavirus scare and economic slowdown will put a cap on overall 5G demand this year, Strategy Analytics report said today.

The COVID-19outbreak is restricting smartphone production in Asia, disrupting supply chains, and deterring consumers from visiting retail stores to buy new 5G devices in some parts of China.

“The first half of 2020 will be much weaker than expected for the 5G industry, but we expect a strong bounce-back in the second half of the year if the coronavirus spread is brought under control,” Strategy Analytics said.

Global 5G smartphone shipments will grow more than ten-fold from 19 million units in 2019 to 199 million in 2020. Consumers want faster 5G smartphones to surf richer content, such as video or games. 5G penetration is set to rise from 1 percent of all smartphones shipped in 2019 to 15 percent of total in 2020, Strategy Analytics said.

The charge to 5G is currently being led by the key markets of the United States and South Korea, reflecting the market’s high-end profile. Launch of 5G smartphones in China market at the end of 2019 will be boosting demand further for smartphones, according to the latest report from ABI Research.

China faces slowdown in 5G

Yangtze Optical Fibre and Cable Joint Stock, one of two top fibre optic cable makers based in Wuhan, said in January it would rely on its manufacturing plants in other parts of China to maintain production.

A company manager told Reuters on Thursday that production had not yet resumed in Wuhan and that other factories were operating at 50 percent capacity.

FiberHome Telecommunication Technologies, another Wuhan-based fiber optic cable supplier, said on its website it was attempting to keep operations going via remote work.

Suppliers such as Shengyi Technology, which makes printed circuit boards and copper cables, and Tongyu Communication, which makes antennas, have said in company filings that production has suffered delays due to the virus.

Construction of 5G base stations for China Mobile moved quickly in late December and January, local media reports quoted a senior executive as saying last week. But a Beijing division of the country’s top carrier also told media that the coronavirus would have a definite impact on the 5G build-out.

“If the carriers cannot get optical fibers in place, they will probably delay the base station purchases,” said Edison Lee, an analyst at Jeffries.

Huawei Technologies, the world’s biggest supplier of telecom network gear, said this week the company had sufficient equipment stockpiles to last three to six months.

Yang Chaobin, Huawei’s president of the 5G product line, said 5G equipment was currently manufactured in Huawei’s own factories.

“Since the outbreak of the virus it’s been some time and actually all Huawei’s own factories have resumed production,” he told reporters in London.

“The major suppliers have resumed production as well, so there’s no impact at all to the supply to our customers.”

In most countries, 5G deployment has not yet begun or is at a very early stage, with network operators proceeding cautiously in light of the costs and a lack of short-term profit potential.