ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
5G networks

Apple's 5G move to spark Asian investment 'boom'

Next iPhone launch will drive spending on network infrastructure, say Huawei and others

SEOUL/TAIPEI -- Asian phone and telecom equipment makers expect soaring investment in next-generation communications technology after Apple reached a deal with chipmaker Qualcomm that paves the way for releasing a 5G iPhone as soon as next year.

Apple's fiercest rival, China's Huawei Technologies, and leading chip supplier Taiwan Semiconductor Manufacturing Co. both welcomed news that the U.S. tech giant settled a long-running patent royalty dispute with Qualcomm.

The settlement includes a six-year license agreement on vital chip technology, the lack of which held Apple back in the race to introduce 5G smartphones.

Huawei, which also supplies 5G network equipment, said the arrival of such an iPhone could spur consumer demand and, in turn, investment in infrastructure. Though Asia already stands at the forefront of global investment in 5G, ahead of the U.S., some carriers appear to have held back on investment amid concerns over the high costs of rolling out the technology.

"We really look forward to Apple joining the race," said Ken Hu, Huawei's rotating chairman. Apple's entry would push others in the industry to move more quickly, he said. "As more and more players roll out 5G smartphones, investments to build the 5G network will boom as well -- and they make more sense now."

TSMC, the world's biggest contract chipmaker, echoed Hu's comments.

"The settlement is a booster for future 5G smartphone deployment," said Lora Ho, chief financial officer and senior vice president. "It helps to eradicate uncertainties that linger in the industry [related to 5G]."

A person close to Samsung Electronics, the world's biggest smartphone maker, said the company also expects to benefit when Apple debuts a 5G iPhone.

"For Samsung, it is no bad thing that Apple launches [5G] phones," the person said, because the South Korean company also can supply parts to the American rival.

Fifth-generation wireless technology is expected to enable faster data transfers, helping unlock innovations such as self-driving cars, remote surgery, augmented reality and artificial intelligence. Though politicians have pushed carriers to invest, some are cautious about the scale of spending required, as these innovations remain in the distance and 4G can do much more.

For example, Japanese telecom SoftBank Corp. has committed less capital to rolling out its 5G network than peers NTT Docomo and KDDI, in a sign of caution over the nascent technology.

In China, too, telecommunications companies are wary. The three state-owned carriers earmarked only around 10% of their 2019 capital expenditure for 5G, according to estimates and official announcements, amid concerns over returns.

So far, 5G networks are available only in limited parts of South Korea and the U.S. Japan plans to begin such service by 2020, ahead of the Tokyo Olympic Games.

But the arrival of a 5G iPhone could accelerate adoption of the technology.

"Apple's entrance to 5G smartphones will definitely encourage Asian countries to set up their 5G network quickly," said So Hyun-chul, an analyst at Shinhan Investment. Japan, for instance, will want to ensure that a 5G iPhone will work there, the analyst said.

Eddie Han, an analyst at Market Intelligence & Consulting Institute, said 5G smartphone shipments are expected to reach only 3 million to 4 million units this year, then rise to 35 million in 2020. But next year's figure could jump to 75 million or even 100 million units if Apple joined the market, he said.

Han expressed confidence, saying "5G iPhones will definitely be available next year. That would surely drive the market demand dramatically and drive mobile operators to get the 5G network ready as soon as possible ... it's a great booster to the industry."

Apple's entry will spotlight the value of 5G investment, Huawei's Hu said. Many have been investing "blindly as it has been a buzzword since the second half of last year," he said. 

"We finally see the industry as a whole is investing in 5G based on a market value perspective," he said. "This kind of investment is very reliable and solid."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more