Supply chain constraints disproportionately impact the non-advanced chipset market, indicating a particular challenge for 5G

Global supply chain constraints, mainly caused by the COVID-19 pandemic, continue to affect nearly every sector, even as much of the world returns to pre-pandemic life. In the telecom market, supply chain pressures have been exacerbated by global sanctions against Chinese supplier Huawei and an increase in consumer and business demand for connectivity infrastructure and solutions.

During a panel discussion at RCR Wireless News’ 5G Monetization Forum, Keith Mallinson, founder of WiseHarbor, and Neil Shah, vice president and co-founder of CounterPoint Research, spoke more specifically about where the restriction is being felt within the telecom industry and how it has influence on the 5G agenda.

“The offer hasn’t completely disappeared,” Mallinson noted, noting that many smartphones are still readily available. “The top five smartphone OEMs will actually all have significantly increased their market shares and their sales volumes year-over-year by 2021…

IDC data supports this claim and shows that the overall smartphone market saw a 5.7% increase in 2021 shipments, despite a “slow” last quarter of the year with a 3.2% decline.

Image courtesy of IDC.

Mallinson said, however, that these OEMs have indicated that while they have enough advanced nodes, they are being hit by a shortage of legacy nodes, indicating a particular challenge for 5G.

“With 5G, everyone is looking for those killer applications that go beyond smartphones and that are IoT, robotics, AR and VR. [and] FWA,” said Shah, explaining that these use cases do not require advanced smartphone chipsets, and are therefore subject to the supply chain constraints outlined by Mallinson. “This situation will continue for at least another year,” Shah predicted, a view shared by others in the industry, including Intel and TSMC.

Routers and other Customer Premise(s) Equipment (CPEs) are also affected as they also require low-end chipsets. Wi-Fi, for example, faces high restrictions, Shah said.

In fact, Shah said that when it comes to monetizing 5G, Fixed Wireless Access (FWA) would have been “an obvious application” had it not been for a pandemic. “We had seen more FWA rolling out… all over the world but that wasn’t the case because of the CPU supply limitation and again the biggest CPU supplier is Huawei so they couldn’t get chipsets [out] …and the transition for someone like Vodafone or European operators moving from Huawei-based CPE to [another vendor] lasted almost 16 to 18 months.”

†[The pandemic] has caused so many disruptions in the kind of balance and continuity that there were in different supply chains. Because of the structure of the chip industry with large investments and fixed capacity, it is much more difficult to adapt things,” said Mallinson. “For example, you have the car manufacturers, who initially reduced their production and reduced their orders, and now it’s going the other way. For the people who don’t line themselves up well, they’re still going to face problems.”

This post What is the impact of the current semiconductor supply chain on the 5G agenda?

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