Telecommunications


2021-09-08

Global Satellite Revenue for 2022 Expected to Reach US$295 Billion, with Industry Leader SpaceX Collaborating with Taiwanese Telecom Companies for First Time Ever, Says TrendForce

In the global satellite market, LEO (low earth orbit) satellites currently hold the most significant advantage in terms of developmental potential due to their closer proximity with earth and their relatively lower latency, radiation, and cost compared to HEO (high earth orbit) and MEO (medium earth orbit) satellites, according to TrendForce‘s latest investigations. Furthermore, not only do LEO satellites not require base stations, but they can also receive signals in difficult-to-reach and rural areas. As their signal coverage is not constrained by such geographical features as mountainous regions, oceans, and deserts, LEO satellites can synergize with 5G mobile communications by reaching areas that lack 5G coverage. After SpaceX generated much attention for LEO satellites, an increasing number of satellite operators have, in succession, applied to launch their own satellites. TrendForce expects annual satellite revenue for 2022 to reach US$295 billion, a 3.3% YoY increase.

With Europe, the US, China, Japan, and Korea participating in LEO satellite and 5G development, challenges still remain with respect to costs and long-term prospects

Regarding the deployment of LEO satellites by country, Asian countries, including China, differ from other major countries in terms of primary applications. Whereas non-Asian countries generally adopt LEO satellites for commercial purposes, Asian countries primary gear their deployment toward “national security” purposes. Some of the major developments in national security applications include AviChina’s Hong Yun project and CASC’s Hongyan constellation, both of which are expected to complete periodic missions in 2022. While policies relevant to the Chinese satellite industry are set by the Ministry of Industry and Information Technology, the industry itself is regulated by the Radio Association of China. In Japan, NTT DoCoMo oversees the development of 6G communication, with an emphasis on NTN technology, which works in tandem with LEO satellites. Finally, Korea’s MSIT recently unveiled its “6G R&D implementation plan”, which includes the launch of 14 LEO satellites by 2031.

Between LEO satellites and 5G telecommunications, the European and US markets are prioritizing ground-based 5G telecommunications first and finalizing the release of all frequency ranges in the 5G spectrum. While the number of ground stations and residents located in regions with 24.75-25.25GHz frequency bands are limited, LEO satellites shoulder the responsibility of preventing signal disruption. On the other hand, certain European organizations, such as the ESA and the European Commission, have established the SaT5G (Satellite and Terrestrial Network for 5G) consortium in order to drive forward the application of and integration between satellite and 5G communications.

In the industry’s current infancy, major satellite operators have launched more than a thousand small LEO satellites. In consideration of these satellites’ less-than-five years’ lifespans, operators will most likely focus on low-cost manufacturing and launching solutions in order to minimize CAPEX, in turn accelerating the pace of satellite adoption and lowering the overall cost of satellites. More specifically, not only have SpaceX and Amazon respectively engaged in vertical integration and streamlined their corporate structures, but they are also aligned with the demands of clients ranging from enterprises, governments, and consumers. As a result of these efforts, SpaceX and Amazon have effectively lowered the costs involved with collaborating with other suppliers.

Satellite recycling and space materials are two major sources of revenue auxiliary to the LEO satellite industry

The 3GPP recently announced that it will finalize Release 17, which for the first time will include NTN (non-terrestrial networks), in 2022. Prior to this, mobile communications and satellite communications had been two separate, independently developing industries. That is why companies working across the two industries in the upstream, midstream, and downstream supply were generally different as well. After 3GPP includes NTN in its upcoming release, the two industries are likely to generate more opportunities for collaboration. At the moment, Tesla subsidiary SpaceX has applied to launch the most satellites among all satellite operators, which include Amazon, Britain-based OneWeb, and Canada-based Telesat, among others. Notably, US operators have launched more than 1,000 satellites, which represent more than 50% of the global total.

Signal transmission and reception between satellites and ground stations are relatively limited. As such, four major satellite technologies, including collision prevention, management, communications, and ground base-satellite transmission, represent four major areas in which potential suppliers can participate. However, given the intense competition among satellite operators, once LEO satellite deployment reaches a global scale in the future, issues such as light pollution may begin to adversely affect planetary and other astronomy research. TrendForce therefore believes that companies capable of supplying materials that can lower satellite reflectivity are likely to experience considerable growth going forward. In addition, small LEO satellites’ lifespan of less than five years will also result in space debris issues. Hence, effectively recycling satellites back to earth is yet another potential commercial opportunity in the space industry.

Starlink is partnering with Taiwanese telecom companies for the first time and is expected to expand these companies’ services areas starting from ground stations

At the moment, one of the pain points associated with LEO satellites is the difficulty for ground stations’ antennas to track satellite signals. Hence, Taiwanese companies that primarily specialize in base station building are therefore likely to benefit from potential partnerships with LEO satellite operators. Although satellite-related companies in Taiwan traditionally focused on manufacturing equipment and components for MEO and HEO satellites, the rise of the LEO market has now persuaded these companies (including MTI, WNC, Kinpo, UMT, Tong Hsing, GPI, WIN, Chicony, EMC, Compeq, and Shenmao) to become suppliers for SpaceX’s Starlink satellite internet system.

Having taken notice of Taiwan’s strategic position that connects northern Asia with Southeast Asia, US-based SpaceX has reached out to Taiwan’s National Communications Commission (NCC) and Chunghwa Telecom, with the latter subsequently confirming its partnership with SpaceX. Chunghwa Telecom is now looking to extend this partnership to a comprehensive business relationship that goes beyond base stations. As the Starlink internet service is expected to be available in Taiwan next year, Chunghwa Telecom will become the sole distributor of Starlink in Taiwan. Now that SpaceX has launched more than 1,800 satellites, Chunghwa Telecom will likely facilitate increased internet connection speed for Starlink via its 18,000 base stations located throughout Taiwan, which synergize with the satellites for better, more comprehensive coverage.

(Covcer image source: Pixabay)

2021-07-29

Market Share of Top Three Suppliers of Base Stations Projected to Undergo Slight Decline in 2021 While Fourth-Ranked Samsung Scores Wins in Overseas Markets, Says TrendForce

Chinese and European suppliers of base station equipment are expected to once again account for a global market share of more than 70% in 2021, and the top three suppliers (along with their respective market shares) are, in order, China-based Huawei (30%), Sweden-based Ericsson (23%), and Finland-based Nokia (20%), according to TrendForce’s latest investigations. Remarkably, although Huawei remains banned by the US government, the company still manages to dominate its competitors in terms of market share due to its products’ cost advantages as well as the enormous demand from the domestic Chinese market.

It should be pointed out that Samsung has similarly benefitted from its relatively low costs and successful 5G commercialization efforts, both of which helped propel its market share this year to 12.5% and secure the fourth place in the global ranking. Not only is Samsung supplying base station components to the three largest mobile network operators in Korea, but it is also collaborating with operators in the US (including AT&T, Sprint, and Verizon) while having established supply agreements with NTT DoCoMo in Japan. On the other hand, Japanese supplier NEC has received its first ever overseas orders this year, from British mobile network Vodafone. Japan-based Fujitsu, likewise, has also been chosen by the British government as an alternative supplier of 5G base station equipment in place of Huawei.

TrendForce indicates that the proliferation of distance learning and WFH applications has brought about a massive 40% increase in average global network bandwidth consumption as the world works to bring the COVID-19 pandemic under control. As such, the 5G network is able to satisfy the current market demand due to its high bandwidth and low latency characteristics. Furthermore, as 5G commercial demand rises in various countries, the GSA (Global mobile Suppliers Association) announced that “the number of announced 5G devices has surpassed 800 for the first time and now stands at 822 announced 5G devices”. These products, including both consumer and enterprise applications, have been released in response to the demand for faster, more convenient network connections across a broad range of applications. In sum, all of the aforementioned factors are drivers of increased 5G base station build-out worldwide.

Key to Huawei’s market share leadership, 5G users in China account for 90% of the global total in 2021

Owing to the ongoing China-US trade war, both Huawei and the three largest mobile network operators in China have been barred from engaging in investment-related activities with US companies. In addition, in July 2021, the FCC (Federal Communications Commission) finalized a US$1.9 billion plan that subsidizes domestic telecom companies to replace base station components from Chinese suppliers, such as Huawei and ZTE, that the FCC considers a potential risk to US national security. Huawei and ZTE have subsequently become unable to acquire key RF front-end components from US suppliers, thereby prompting Huawei to shift its base station infrastructure business towards the domestic Chinese market instead.

Regardless, TrendForce’s findings indicate that, as of late-2020, the number of 5G users in China surpassed 160 million, which represented about 89% of the global total. As of July 2021, the three largest mobile network operators in China, including China Mobile, China Unicom, and China Telecom, have established 916,000 5G base stations domestically, which comprise 70% of the global total. Not only does this number point to the impressive magnitude of the Chinese telecom market, but it has also been the key to Huawei’s leadership in the base station market for nearly two years.

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