Component shortages and supply chain issues have affected a wide range of areas of the telecommunications industry, from building fiber optic networks to the availability of smartphones.
But so far, the mobile network operators in the United States have said that their main efforts ?? building fast 5G midband networks ?? remained unchanged.
“There are, of course, challenges in the supply chain,” Verizon CEO Hans Vestberg said last month on the company’s earnings call, in response to a question on the matter. , according to Seeking Alpha. “I think our team is the most outstanding operational excellence team in the world and is getting around it all. On all major equipment, radios, etc. our suppliers years ago, so we feel really good about that. ”
But there are indications that the situation could change in the coming months.
“Risks related to supply in the RAN [radio access network] equipment, they have increased somewhat, “noted analyst Stefan Pongratz of research and consulting firm Dell’Oro Group, in comments last week to Light Reading.” It could get worse before it gets better.
Problems in the supply chain first surfaced earlier this year. Electronics companies ranging from video game console makers to auto suppliers have reported difficulty obtaining low-end chipsets for their products. More recently, the problem has been exacerbated by shipping delays, staffing issues, and other issues.
Then, over the summer, the situation started to worsen in different parts of the telecommunications industry. Equipment suppliers like Adtran have started to warn of shrinking product supplies. Smartphone vendors like Samsung couldn’t stock the shelves. And service providers like AT&T have been forced to scale back their fiber network expansion plans.
But 5G carriers like T-Mobile, AT&T and Verizon have all so far reported that massive construction of their mid-range 5G network remains on track for this year. This is significant given that companies collectively spent over $ 100 billion on this upgrade effort. This spending spans 5G radios, spectrum licensing, and cell tower space.
But there are indications that component shortages, shipping delays, and other supply chain issues will have a significant impact on the delivery of mid-range 5G equipment during the remainder of 2021 and ?? above all ?? in 2022.
5G providers are starting to sound the alarm bells
“We had some significant challenges in the third quarter,” said Eric Stonestrom, CEO of Airspan, according to a Seeking Alpha transcript of the company’s earnings call earlier this month.
Airspan is a relatively small 5G radio equipment supplier whose customers include Japanese Rakuten. Stonestrom said the company delayed third-quarter product shipments by $ 20 million due to supply chain issues. He blamed Airspan chipset vendors, including Qualcomm, Intel, and Skyworks, for the problem.
“If the parts come in seven, eight or nine months when they were delivered twelve or sixteen weeks, it takes a lot more thought in terms of the construction plan for the year. , “he explained.
Stonestrom predicted the situation could force Airspan to delay shipments up to $ 40 million in the fourth quarter.
And Airspan isn’t the only 5G hardware vendor to warn of delays in shipping its products.
“We have been very proactive in our efforts and built up stocks and flexibly created a supply situation,” Ericsson CEO Borje Ekholm said during the company’s earnings call last month. , according to a transcript from Seeking Alpha. Ericsson is one of the world’s largest providers of 5G networking equipment. “But at the end of the third quarter, we saw some impact on individual component shortages.”
And Nokia ?? another major supplier of 5G hardware ?? reduced its overall “addressable market” to 5% from 6%, mainly due to supply chain issues.
Vendor warnings are important given that all of the major 5G network operators in the United States mainly obtain their network equipment from Nokia, Ericsson and Samsung. Product delays by one or more of these vendors will undoubtedly slow down the build of mid-range 5G in the United States.
“It’s definitely something to keep in mind,” said Pongratz, of the Dell’Oro Group. He said his company has yet to adjust any of its forecast for equipment sales, but may do so in the future due to the supply chain issue.
Another headwind from the middle band
This is definitely bad news for AT&T and Verizon. They are feverishly working to catch up with T-Mobile in building mid-range 5G in the United States. Mobile networks operating on the mid-band spectrum are widely considered ideal for 5G, given that transmissions in these spectrum bands are both fast and widespread.
T-Mobile hopes to cover up to 200 million Americans with its mid-range 5G network by the end of this year. Meanwhile, AT&T and Verizon recently delayed setting up their own mid-range 5G network for a month in response to concerns that transmissions in their mid-range spectrum could interfere with airline operations. But Verizon still hopes to cover up to 100 million people with its mid-range 5G network by March 2022. And AT&T hopes to cover up to 75 million people with its own mid-band 5G network by the end of this year. 2022. And the two operators hope to develop considerably. these coverage areas throughout 2023.
But equipment shortages could affect those construction targets.
Additionally, AT&T, Verizon and T-Mobile are all participating in the FCC’s ongoing spectrum auction in the 3.45-3.55 GHz band, an event that promises to free up even more mid-band spectrum for 5G. 5G equipment vendors, including Ericsson and Nokia, have confirmed that operators will need to deploy even more equipment to use the 3.45-3.55 GHz band. But shipments of this equipment could also be delayed by component shortages and supply chain issues.
“The momentum [around midband 5G] shows some weakness, ”admitted Pongratz. But he said it was too early to quantify how the situation might develop.
?? Mike Dano, Editorial Director, 5G and Mobile Strategies, Light Reading | @mikeddano