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TrendForce forecasts that the value of the global 5G market will reach US$14.5 billion in 2023 thanks to the promotion of 5G private networks by enterprises and the upgrading of the equipment purposed for small cells and 5G FWA. Then, the global 5G market will further scale up to US$37 billion in 2026, with the CAGR for the 2023~2026 period coming to 11.0%. Applications related to the Metaverse will help spur the demand for 5G networks during the period.
TrendForce states that the main application segments of the market for 5G networks are industrial manufacturing, energy and utilities, medical solutions, smart vehicles, public transportation, and consumer electronics. Regarding the distribution of the projected total market value of US$37 billion in 2026 by application, industrial manufacturing will have the largest share of 32%. Manufacturing companies will leverage 5G to mainly upgrade their factories, such as making production processes more intelligent and combining production processes with solutions related to data visualization and analysis. Energy and utilities will have the second largest share of 18%. The connection of smart energy meters to a power grid will require a 5G network. Furthermore, 5G technologies will be embedded in the energy equipment for monitoring power generation and predicative maintenance. Medical solutions will have the third largest share of 15%. Efforts to incorporate 5G into the field of healthcare will mainly focus on telemedicine that can raise clinical efficiency in remote areas.
As for smart vehicles and public transportation, their collective portion of the total market value in 2026 will come to 25%. Since 5G offers lower latency, carmakers and suppliers for automotive components want to leverage this advantage to develop better advanced driver assistance systems (ADAS). Turning to public transportation, 5G is expected to play a vital role in the development of platforms for mobility as a service (MaaS). Lastly, with regard to consumer electronics, this application segment will account for 10% of the total market value in 2026. Various 5G solutions will be embedded in smart appliances and devices so that they are all interconnected.
Regarding Taiwan-based companies that are involved in the 5G market, they mainly focus on products related to small cells, commercial private 5G networks used by enterprises, and 5G FWA equipment. In recent years, the build-out of 5G infrastructure worldwide has been proceeding at a rapid pace. This has also contributed to significant advances in technologies for edge computing. Taiwan’s SERCOM, for example, has developed 5G small cells and 5G FWA equipment. Shipments of its products have also been ramped up in order to meet the surging market demand generated by the aforementioned developments. Askey, which is another network equipment provider from Taiwan, came to CES 2023 to promote its 5G private networks. The company seeks to expand its presence in the European and North American markets for 5G applications and services.
Demand for Applications Related to Metaverse Will Not Truly Take Off Until After Two to Three Years, but It Will Act as Notable Demand Driver in Meantime
TrendForce points out that the biggest difference between applications under the Metaverse and those under cloud services is that the former places much greater emphasis on interactions among multiple parties. Through real-time image rendering and data synchronization, the Metaverse seeks to create a shared platform among users, as opposed to the more traditional video-based communications. Moreover, Metaverse platforms create digital twins of users for engaging in deeper real-time interactions through speech, visual cues, movements (as performed by avatars), etc. Data transmissions associated with these virtual activities are much larger in scale and more complex, so the platforms will require a high-speed and reliable network in order to provide the full user experience.
Currently, the Metaverse is a newly emerged concept, so companies that are involved in the related applications and services are still in the initial exploratory phase. Also, more time is needed to develop the key technologies such AR/VR and control interfaces that allow users to sense and operate within a virtual environment. Therefore, TrendForce believes the market for Metaverse-related applications will take at least two to three years of cultivation. Development efforts will remain focused on social media, multi-player games, education services, simulation training, remote collaboration, and virtual meetings.
Among the global telecom operators and network equipment manufacturers, Nokia, Ericsson, and Huawei are now eyeing opportunities coming from the Metaverse. To support related services and applications, these companies have invested resources to upgrade their network equipment and optimize their network environments. In doing so, they will be able to handle the high-speed computing demand generated by large-scale and real-time virtual interactions that are taking place on Metaverse platforms.
Nokia, for example, is developing two key Metaverse technologies through its subsidiary Bell Labs: human augmentation and digital-physical future. As for Ericsson, it is now working on time-critical communication as one of its core 5G offerings. Time-critical communication can optimize 5G hardware and ensure highly reliable real-time services. Compared with Nokia and Ericsson that mainly focus on improving 5G technologies, Huawei is also deploying hardware across Africa in addition to its existing markets in North America and Europe. For instance, Safaricom, which is the largest telecom operator in Kenya, has become the first telecom operator in East Africa to roll out a commercial 5G high-speed network by adopting Huawei’s solutions for network infrastructure.