Building the Early Supply Chain Path to 5G

5G technology is still on the horizon but in order to support the huge projected market growth, OEMs should start considering supply chain questions and building the right supplier relationships now. Real application of 5G is expected to arrive in late 2019 and early 2020.

“We are still 18 to 24 months out,” Ashish Parikh, director of IoT platforms and solutions at distributor Arrow told EBN. “We are going to see more on infrastructure in 2019 and 2020. Industrial devices, assets, and people’s understanding of what it means and how take advantage of it with the first wave of industrial devices will be 2020 or 2021. The leaders in the space can start taking advantage of this. It’s not too far off that.”

Editor’s Note: After perhaps a decade in research labs and drawing boards, 5G is on the verge of deployment. Indeed, early deployments of the technology are coming online now. You can tell because the marketers have sunk their teeth in and started promoting it. With 5G moving out of the lab, the team at Aspencore looks at what it will take to reach full deployment — from technical, supply chain, carrier, and policy perspectives .

Distance learning, video conferencing, multi-user gaming, telematics/automated driving, and other uses are all potentially empowered by new 5G technology. What’s fascinating about the 5G rollout, you typically think about telecom and handsets because of the innovation of this technology, it allows for a lot of applications that people don’t think about,” said Jonathan Lee, director of Global Commodity Management at Flex. “The conversations vary wildly. With 3G and 4GLTE, those conversations didn’t happen.”

Image courtesy: Flex

Image courtesy: Flex

The efficiency and low-investment requirements of 5G compared to other technologies makes it ripe for a variety of applications, according to a report from Market Research Future. “The factors contributing to the growth of the 5G technology are the shift toward new broadband technology, growing demand for high data speed, huge network coverage, and stable growth in the mobile data traffic, increasing demand for machine-to-machine communication in organizations and the increasing demand for broadband services over other mobile networks,” the report said. The  research firm predicts a compound annual growth rate of 22% for 5G over the next five years, adding that the market size will reach $73 million by 2023.   

Image courtesy: Market Research Future

Image courtesy: Market Research Future


Further, it promises speeds that are 10 times faster than 4G standards in most applications but up to 100 times faster in some limited scenarious. “The rising demand of higher speed rates of internet all over the globe is driving the 5G technology market, 5G networks can deliver data-access speeds up to 10 Gbit/s,” the MarketWatch report said. “5G technology will be comprised of lowest possible latency i.e. 1-5 milliseconds which is an indulging factor for consumers.” MarketWatch is even more aggressive with its predictions around 5G putting the potential global market size at about $90 million in 2023.

At the same time, 5G standards continue to evolve and infrastructure needs to be built. “There are definitely many challenges ahead not just for contract manufacturers but also for the OEMs, supply base and carriers,” said Graham Scott, senior director, Global Commodity Management for contract manager Jabil. “Around 5G specifically, there are a number of new elements that we have to consider, from the standards we use to the infrastructure that’s required. We’ve already seen it with 3G/4G convergence.”

The up-coming fifth-generation wireless broadband technology is based on the IEEE 802.11ac Standard for Information Technology. A second set of standards, specifications for the standalone version of 5G New Radio (SA 5G NR), was ratified this summer.  However, details remain to be worked out as OEMs work to figure out how to couple LTE Advanced and Wi-Fi with 5G technology to address the demands of new applications.

Check out the articles showing how 5G is coming along and the issues it still faces .

5G test gears up
As products emerge and networks assemble, the test-equipment industry must keep up with standards, production, and deployment.

5G: Where is it and where is it going?
Despite the oncoming hype, 5G has a considerable way to go given that deployment is just beginning. We still need much of systems to get into full production. Then, businesses and consumers will have to buy the products.

Could local fees kill 5G?
The costs wireless carriers will have to pay to install small cells could be a hinderance to deployment and a windfall to local governments.

Optical interfaces to address 5G test
ODI is now positioned to address difficult challenges in 5G communications, mil/aero systems, and high-speed data acquisition

5G Networks Under Construction
Engineering managers from AT&T and Verizon share their experiences designing and deploying their first 5G cellular networks.

5G buildout will be more involved than we’ve been led to believe
The spectrum that each cellular network operator has license to will have ramifications for the 5G networks they will have to build. Among the most significant of those ramifications is cell spacing.

In these early stages, design quandaries take precedence over sourcing questions. “Many of our customers ask us for design support,” said Jabil’s Scott. “Even through the last six to nine months, we’ve had many conversations where telecom providers ask whether we can support them with the supply of components, market intelligence, design support, and escalation of materials handling. “

Image courtesy: Flex

Image courtesy: Flex

These decisions, however, will ultimately effect sourcing.  Designers are considering whether to process data on the edge of the network or transport it. In addition, designers must consider how to safeguard the data and how to leverage insights gained from it. “Streaming video is still expensive, but the cost of a data breach is priceless,” said Parikh.

Disruptive technologies like 5G also can magnify typical supply chain concerns. “Clearly, in getting new products to market, the components are often also new to the market,” said Scott. “Product yield becomes an important question, since, if you’ve never made it, it’s hard to know what yield might be.”

Organizations will need to build relationships with new suppliers and add new components down the line to their shopping lists. “From a supply chain perspective, it’s important to build the right relationships with suppliers to enable these types of products,” said Flex’s Lee. “5G is much different than consumer electronics. Wireless connectivity creates a complex design cycle and requires certification. There’s only a small subset of suppliers offering models and they don’t sell to everyone. Having a relationship with those providers and the silicon providers who supply them is crucial.” 

It will take time for the product roadmaps of 5G silicon product providers to sync up with the product roadmaps of the products incorporating those devices. “In the 5G space, some customers are trying to be first to release a handset in 2019 but the major IC suppliers like Qualcomm, Intel and tier 2 suppliers have roadmaps that are in flux. Your supply chain needs to remain agile enough to absorb volatilities. 

In this vein, organizations should think about the stability of their bill of materials (BOM), Scott said. “When you are looking at a new product, you need to know how stable the BOM is and how much runway you have until the product goes to market,” he added. “In these scenarios, the BOM is not 100% so it’s a work in progress and that’s a big challenge.”

In these early days, the talent supply chain is also a concern as 5G puts new demands on the engineering task. “In the electronics industry, we think in term of electronic components, but engineers and expertise to build 5G products are another type of component,” said Parikh. “Those are the longest lead times we have today. People will probably struggle with access to 5G talent the most.” 

Being able to successfully design and roll out of 5G products will take considerable design talent, comfort with complexity and a variety of added certifications, Lee said.

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

2 comments on “Building the Early Supply Chain Path to 5G

  1. MelBrandle
    January 8, 2019

    It won't be long until we finally get to realize the 5G technological advancement. Every industry and not just supply chain alone ought to take this current timeframe to perfect their processes before the actual eventual launch. This can help to prevent any delays in their opportunity to utilize this fast high-tech platform towards their own advantage.

  2. PaulChau
    January 15, 2019

    This might sound like a very amateur way to look at all of this, but I think that as long as the 5G network builds upon the capabilities of the previous systems and network in storage, there's no reason why it can't manage to achieve a lot more than its predecessors can. It's a matter of the telecommunications companies constantly making the effort to improve isn't it?

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