5G networks in the sub-6 GHz frequency range are predicted to comprise 77% of the market in 2020, though mmWave deployments will increase as engineering difficulties are overcome.
As mobile network operators begin 5G service deployments around the world, the market for 5G chipsets—which enable 5G packet transmission on smartphones, portable hotspots, IoT devices, and increasingly, notebook PCs with mobile network capabilities—is expected to reach $2.12 billion in 2020, and $22.93 billion by 2026, according to a report from Allied Market Research.
Compared to existing LTE-powered deployments, standards for Massive Machine Type Communication (mMTC) in future versions of 3GPP specifications are likely to result in more devices, particularly IoT devices, to be connected via 5G. According to a press release, "However, heavy investment and technological & infrastructure challenges in the implementation of 5G network hamper the market growth. Moreover, privacy & security concerns hamper the growth of the market. On the contrary, increase in government initiatives for developing smart cities is expected to create lucrative opportunities for the key players in future."
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Additionally, the report indicates that by 2020, 5G deployments using FR1 frequencies (450 MHz - 6 GHz), also called sub-6 GHz, will comprise 77% of the total market share.
From a global perspective, initial 5G network deployments are effectively bifurcated, as mobile network operators in the US prioritize millimeter wave (mmWave) deployments, between 24 and 52 GHz, defined in 5G standards as FR2. Early deployments in FR2 do not cannibalize spectrum already deployed for LTE networks, though the use of mmWave deployments presents a variety of engineering difficulties that researchers are working to resolve.
mmWave communications are subject to "rain fade," as even moderate rainfall easily absorbs the radio signal between the base station and receiver. (The effect is comparable to the effects of rain on satellite television services.) Likewise, the use of higher radio frequencies requires adjustments to antenna design. Presently, mmWave-compatible 5G chipsets have a higher power consumption, which depletes batteries more quickly, while increased heat from the chipset can adversely affect the total effective lifespan of the battery over the lifetime of the device.
For comparison, China is prioritizing FR1 deployments of 5G, which are not subject to these engineering difficulties. Government mandates and differences in existing spectrum allocation between the US and China are the primary factors enabling their rapid deployment of sub-6 GHz 5G network deployments. Additionally, initial deployments in China are 5G NR SA (standalone), which decreases deployment cost.
Because of the differing priorities in 5G deployments between the United States and China, chipset manufacturers are focusing first, on either FR1 or FR2 compatibility for 5G chipsets. HiSilicon, a chipset manufacturer owned by Huawei, is focusing first on FR1 compatibility, as Huawei's domestic Chinese market is most likely to buy their phones. To contrast, Qualcomm's X50 5G chipset is the most mature platform at present for FR1 and FR2 compatibility.
The big takeaways for tech leaders:
- Initial 5G deployments will focus on sub-6 GHz (FR1) frequencies in China, while mobile network operators in the US will deploy in mmWave (FR2) frequencies first.
- In 2020, 5G deployments using FR1 frequencies, will comprise 77% of the total market share. —Allied Market Research, 2018
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