Riding on upgrade in telco infrastructure
Commercial production of 5G RF chips to start in the second half of 2018
MINI-Circuits Technologies (Malaysia), a subsidiary of Scientific Components Corp, is in the midst of prototyping its 5G radio frequency integrated circuits (RFICs) for 5G telecommunication infrastructure.
The company has added 150 engineers to its headcount and works are underway at its new RM92mil design and manufacturing facility in Bayan Lepas to deploy the new product as soon as possible, says president and chief executive officer Datuk Seri Kelvin Kiew.
“The other software and hardware components of 5G mobile network infrastructure are being developed in the other facilities located in the US, the UK, and Asia.
“The commercial production of the 5G RF chips should commence in the second half of 2018,” he adds.
Kiew says there is now a race to see which telecommunication service provider would be able to roll out the first 5G mobile networks, which is expected to be in early 2019.
“We are also seeing chipmakers and network equipment makers investing heavily in the technology, with the aim to roll out the first products as soon as possible.
“In fact, some of the new models of smart devices are already equipped with 5G RF chips. But without 5G mobile networks, the chip inside won’t be able to function to its full potential,” he explains.
The 5G infrastructure market is projected to have a market value of US$40bil by 2025.
According to an SNS Research report, the 5G market is expected to grow at a compounded annual growth rate (CAGR) of 84% between 2019 and 2025, eventually accounting for more than US$40bil.
SNS Research is a global market intelligence and consulting firm with a particular focus on the telecommunications, IT, defense and pharmaceutical industries.
So, what is the fuss over 5G? Aside from greater speed, a major advantage of 5G is greater capacity.
“Current 4G contracts offer promises of speed of up to 150 Megabits per second (Mbps) on the go but leave most users with inclusive data allowances of less than 5GB due to limited capacity.
“5G is expected to offer upwards of 1,000 times the capacity of 4G which would allow mobile networks to offer greater data allowances as part of their mobile plans,” says Kiew.
Mbps refers to data transfer speed as measured in megabits (Mb). A megabit is just over one million bits.
“5G networks, depending on the standard, also allow current network coverage to be expanded into hard-to-reach areas. In the UK, where 4G is widely rolled out, there are still areas where coverage is minimal.
“5G allows further penetration, deploying multiple smaller antennae to allow signals to be emitted in multiple directions and even bounced off solid surfaces.
“The 4G chips are still in production, but the new rollouts for 4G long-term-evolution (LTE) network is declining,” he says.
With this development, Kiew is expecting the Penang plant to turn in revenues of US$100mil this year, up from US$80mil in 2016.
“For the first half of 2017, we have achieved a turnover of about US$50mil. We have also invested approximately US$15mil for expansion this year,” he says.
As a group, Scientific Components is projected to see a turnover of around US$380mil for 2017, compared to US$350mil in 2016.
Annually, Mini-Circuits spends 10% to 15% of its revenue on research and development work.
Mini-Circuits specialises in making broadband RF chips which can be used for both low- and high-frequency transmissions. The company produces RF chips such as amplifiers, digital step attenuators, mixers and switches for use in mobile network infrastructure, cable TV modems and equipment.
“Low-frequency chips are used for transmitting data at a short distance, while high-frequency chips are used for long distance transmissions. These chips can go into cellular devices or base stations. We produce a wide range of high mixed RF chips in low volume quantity annually,” says Kiew.
Mini-Circuits spends 30% to 40% of its production cost on imported raw materials, such as gallium arsenide, to design their RF chips.
The prospects of the telecommunication industry looks very positive, says Kiew.
“According to Deloitte’s 2017 Telecommunications Outlook, US consumers are looking at their devices more than 9 billion times a day in the aggregate – up 13% from last year.
“The report also says smartphone sales are still strong, with penetration up 10% year-on-year, and the highest growth percentages are coming in from the 45-54 and above 55 age demographics. These groups were previously lagging behind younger consumers,” he says.
Additionally, while they are still relatively niche products, wearables such as smart watches and fitness bands have seen tremendous percentage growth. Smartwatch penetration doubled from 2014 to 2015 and tripled in 2016, having now penetrated roughly 12% of the mobile consumer market in the US. This adds to the growth of the mobile industry.
“The growth in smartphone usage signals continuing opportunity for all telecom sub-sectors, including wireless and wireline/ broadband carriers, network equipment, infrastructure companies, and device manufacturers,” he adds.