There has been much talk about 5G over the past few years. The fact that it was one of the points of contention in the China-US trade war put it even more in the limelight. 5G refers to the emerging fifth generation wireless networks and technology. 5G is a vast improvement from 4G in terms of data transmission speed, capacity, and low latency. It also gives rise to a series of new technologies that would result in major changes in various fields, from driverless cars to smart cities, and from virtual reality to battle networks.
In the past few years, countries around the world have been actively building 5G networks. According to statistics from the Global Mobile Suppliers Association (GSA), as of December 2020, there are 140 operators with launched commercial 5G networks in 59 countries/territories around the world. This is nearly double that in February 2020, where only 78 operators in 43 countries announced the deployment of 5G within their live network.
China and the US are the two most important participants in the global building of 5G networks. In particular, the Chinese government and enterprises have heavily invested in the building of 5G networks in recent years. Although the US is an undisputed leader in technological innovation, more and more people are still wondering: has China really surpassed the US in 5G? To answer this question, we should first review the development of mobile wireless technology in the past few decades.
From 1G to 5G
1G technology was introduced in the late 1970s and adopted in the early 1980s. Since then, new generations of technologies and wireless standards are updated every ten years or so. We are currently at the transitional phase between 4G and 5G.
Over the past generations of change and transition before the arrival of 5G, leading countries of each era have obtained huge commercial value, as well as competitive and security advantages, from the huge mobile wireless market.
During the 1G era, the US dominated the world and all core technologies and applications were basically developed by American companies. In the 2G era, European countries gained a competitive edge. Since the 1990s, European companies such as Nokia and Ericsson launched advanced GSM equipment much earlier than anybody else and dominated the global mobile wireless market. But later on in the 3G transformation, European regulatory authorities requested for time-consuming auctions of 3G spectrum instead of simply repurposing the existing 2G spectrum bandwidth, resulting in the European companies losing their competitive edge. Following this, Japan took the lead on 3G. Although the US ultimately caught up with Japan, it spent several years doing so and American enterprises had to pay a high price for it. For example, during this period of time, many American wireless technology companies either closed down or were acquired by foreign companies.
The US learnt their lesson when they developed 4G, and actively increased the strength of investments and construction of 4G networks beforehand, helping the country fully take the lead when 4G arrived. Apart from this, the US’s Federal Communications Commission (FCC) also approved the licensing of more spectrums and developed relevant regulations that promoted the rapid expansion of 4G networks, in turn developing and shaping a mature 4G ecosystem in a short amount of time. This helped the US dominate the 4G smart device market.
Over the past generations of change and transition before the arrival of 5G, leading countries of each era have obtained huge commercial value, as well as competitive and security advantages, from the huge mobile wireless market.
5G: China’s turn to shine?
In the development of 1G to 4G mobile wireless technology, Chinese enterprises have always been followers striving to learn from the advanced technologies and market experiences from leading countries. Finally, at the dawn of the 5G era, Chinese enterprises are standing in the front row of the stage, displaying their leadership capabilities. The global 5G competition has just begun. It is still too early to know for sure who the real leader is at this juncture. However, we can objectively analyse China-US competition in the 5G field according to the following four key indicators: spectrum availability, scope of 5G applications (including 5G network construction and application), 5G patent and standards, and core chip technology.
Among these indicators, spectrum availability has a great impact as many other factors are either directly or indirectly dependent on it. Two methods are adopted worldwide in the deployment of hundreds of megahertz of new 5G spectrums. The first method focuses on the electromagnetic (EM) spectrum below 6 GHz — also known as “low- to mid-band spectrum” or “Sub-6” — mainly in the 3 GHz and 4 GHz bands. This method is adopted by China and the majority of other countries in the world. The second method focuses on frequency bands between 24 and 300 GHz, commonly referred to as “high frequency spectrum bands” or “millimeter-wave (mmWave)”. This is the method currently adopted by the US, South Korea and Japan (although all three countries are also exploring Sub-6 bands to different extents).
US operators mainly focus on 5G mmWave deployment because most of the 3 GHz and 4 GHz 5G spectrum used in other parts of the world are exclusive federal frequency bands in the US, used in particular by the Department of Defense. This situation significantly restricts the US in the 5G race.
Generally speaking, mmWave with shorter wavelengths produce narrower beams which provide better resolution and security for the data transmission. Furthermore, they are capable of transmitting enormous amounts of data at a high speed with low latency. In addition, with the availability of large mmWave bandwidths, data transmission speeds are not only increased, but spectrum congestion in low frequency bands is also avoided. When compared with Sub-6 bands, however, mmWave has significant weaknesses. With a longer wavelength, Sub-6 can better penetrate objects and provide wider and broader coverage than mmWave with better anti-interference abilities and lower risks of interrupted connections. Thus, when covering the same communication area, Sub-6 requires fewer base stations and capital expenditure than mmWave.
According to Google’s preliminary 5G application research, using “425 MHz of spectrum at 28 GHz (a mmWave configuration standard for current US 5G trials), compared to 250 MHz of spectrum in the 3.4 GHz band (a Sub-6 configuration, standard for Chinese 5G trials and deployment)” deployed on “72,735 existing macrocell towers and rooftops (the easiest choice for deployment)”, mmWave could only cover 3.9% of the US population at 1 Gbps. On the other hand, based on the Chinese’s Sub-6 standard, “the same tower sites covered… 21.2% of the population at 1 Gbps”. In addition, mmWave network connections are more susceptible to environmental changes such as moving cars and thus become more unstable. Apart from these, the Sub-6 approach could also make better use of the existing 4G infrastructure.
These few points make Sub-6 a potential 5G standard. US operators mainly focus on 5G mmWave deployment because most of the 3 GHz and 4 GHz 5G spectrum used in other parts of the world are exclusive federal frequency bands in the US, used in particular by the Department of Defense. This situation significantly restricts the US in the 5G race. In the future, it is expected that most countries would generally adopt both mmWave and Sub-6 in developing and building 5G networks. MmWave would be used in a small number of densely populated areas, while Sub-6 would be used to cover the remaining vast areas.
In terms of building the 5G network, the Chinese government and China companies are investing a lot in 5G. According to public data from the Ministry of Industry and Information Technology (MIIT) of the Chinese government, as of the end of 2020, China has built the largest 5G network in the world, with over 718,000 5G base stations throughout the country and 5G coverage for all prefecture-level cities, as well as over 200 million 5G terminal connections. This is at least ten times the 5G network in the US, and far outstrips the 5G networks in other countries.
China’s 5G network development may be rapid, but given the severe lack of 5G applications, it is hard to say whether this is a wise decision at this moment.
Battle will be in 5G applications
However, compared to the rapid push to build the 5G network, the development of 5G applications in China and the rest of the world has been slower, particularly in terms of 5G killer apps. Despite the constant encouragement to have 5G smart factories, healthcare, education, and other applications, in none of these areas does 5G have any obvious advantage over current technologies, which is why there are no very successful large-scale 5G applications thus far.
Even in acknowledged 5G fields, such as driverless vehicles and virtual reality, there are no 5G killer apps. Currently, there is no clear answer whether there will be quick, high returns on the investment into building a large-scale 5G network, as with the previous 4G network. So, China’s 5G network development may be rapid, but given the severe lack of 5G applications, it is hard to say whether this is a wise decision at this moment. Of course, it cannot be ruled out that when 5G infrastructure develops to a certain point, there may be an explosion of new 5G apps, but right now there is a lot of uncertainty.
... they (China) lag behind Korean and European companies in terms of granted patents, and are also lagging behind US, European, and Korean companies in terms of patent value index.
In terms of 5G patent standards, while China companies have improved a lot compared to the time of 3G and 4G, overall they are still at a comparative disadvantage. According to a report on 5G patents released in 2020 by patents data company IPLytics, while China companies such as Huawei and ZTE led in terms of declared patents, they lag behind Korean and European companies in terms of granted patents, and are also lagging behind US, European, and Korean companies in terms of patent value index.
When it comes to 5G standards, China, Europe, and the US have worked together to draw up common 5G standards, while China’s Huawei and the US’s Qualcomm have been in intense competition over coding standards. In the end, the Polar code promoted by Huawei was selected as the control channel encoding scheme for the application of 5G in the eMBB (enhanced mobile broadband) scenario, while low-density parity-check (LDPC) code as pushed by Qualcomm is used for other scenarios such as ultra-reliable and low latency communications (URLLC), and massive machine type communications. While China has a lot more say in technical standards now as compared to the 3G and 4G era, Qualcomm is still extremely influential in terms of core technical standards.
Mainland China is doing well in 5G chip design, but it is highly dependent on technology from other countries in terms of manufacturing, especially in key equipment such as steppers, which are used in integrated circuits.
Main players chipping away at a lead
Competition in 4G smartphone baseband chips was intense, with nearly 20 manufacturers around the world duking it out. But in contrast to this messy 4G free-for-all, only a few manufacturers with strong R&D capabilities can make it into the 5G arena. In terms of 5G smartphone chips, currently there are only five major 5G chip manufacturers: Huawei and Unisoc from mainland China, MediaTek from Taiwan, Qualcomm from the US, and Samsung from Korea.
As for 5G chips for base stations, as these have lower requirements for chip size and power consumption than smartphone chips, there are more players in the market: Sanechips Technology, Huawei, Intel, and HiWafer all produce a significant volume. The industry chain for chips includes design, manufacturing, packaging, and testing. Mainland China is doing well in 5G chip design, but it is highly dependent on technology from other countries in terms of manufacturing, especially in key equipment such as steppers, which are used in integrated circuits.
The US holds a lot of key technologies and intellectual property in chip manufacturing. Since 2018, China-US trade frictions have intensified, and the US’s cutting off core 5G chip supplies has had a significant impact on the development of China’s 5G industry. To put it simply, the US still dominates the 5G chip industry value chain, and it will be very difficult for China companies to completely bypass the US’s IP framework and push for local chip manufacturing.
The analysis above shows that compared to the time of 1G through 4G networks, China is among the top in 5G technology and applications, but it is not the outright leader. In particular, the US still dominates key patents and standards in 5G technology as well as chip technology, and whether China and the US cooperate competitively or decouple completely when it comes to 5G will have a great impact on global 5G development. Whether the new US administration will adjust its strategy towards China in 5G is still unclear, and there remains a lot of uncertainty in global 5G development.
Related: Cut-throat competition for world-class chips: The end of Huawei? | China looks forward to a new world of 5G connectivity | China's whole-of-nation push for technological innovation | Southeast Asia a contested venue for telecommunication superpowers building 5G networks
