5G deployment could slow down on tech components’ delivery delay


THE 5G network deployment in Malaysia could face a delay due to hardware and resources disruptions as the coronavirus outbreak shows no signs of tapering off with the death toll breaching the 2,000 mark (at press time).

China, a main global supplier of 5G hardware and the manufacturing base for a myriad of super-speed electronic components, is battling against time to restore normalcy to its manufacturing sector.

Chinese tech company Huawei Technologies Co Ltd is the 5G hardware builder, besides compatriot ZTE Corp. Sweden’s Ericsson and Finland’s Nokia Corp are the other contenders who are battling for the lucrative 5G network across the globe. But most of their components are manufactured in China.

Malaysia is committed to rolling out the 5G infrastructure, with the resort island of Langkawi chosen as the test bed for the super-fast Internet technology.

MIDF Amanah Investment Bank Bhd senior analyst Martin Chuan Loong Foo said there could possibly be delays due to the disruption of hardware supplies and the manpower assigned to the 5G related projects.

“But the earnings impact of 5G to local telecommunications companies (telcos) is still negligible. Nonetheless, we expect 2020 to be a tough year for the telcos. We see little avenue for telcos to expand their revenue this year as we expect competition to remain rampant, especially from U Mobile Sdn Bhd, in conjunction with its upcoming IPO exercise,” Chuan told The Malaysian Reserve.

Many manufacturers in China have not fully returned to maximum production due to the Covid19 outbreak. The disease, which was detected in Wuhan late last year, had spread across the globe.

The spread of the virus had forced Beijing to curb movement of its people and put affected cities on lockdown. China, which is the global motherboard of electronic devices’ manufacturing, had its factories shuttered and deliveries halted.

Apple Inc had already warned of production delays due to the coronavirus. It manufactures most of its popular iPhone in China. The company had also issued profit warnings due to lower demands and supply shortage.

Malaysian manufacturers are already issuing warnings of supply disruptions, especially for raw materials originating from China.

Some local companies are also expecting increases in cost for components sourced from other countries besides China as demands outstripped supplies.

Even components and products like personal computers could face delays in reaching Malaysian customers.

The Malaysian Communications and Multimedia Commission reportedly stated in January that it will award the spectrum bands for 5G rollout in Malaysia by the third quarter of this year (3Q20).

The spectrum bands will be tendered out to a single consortium of multiple licensees by the 2Q20.

Malaysia plans to issue spectrum tenders in April and estimates that 5G infrastructure development would cost around RM21.6 billion over five years.

Huawei has already signed a 5G deal with Malaysian mobile network operator Maxis Bhd and preliminary agreements with other telcos such as Celcom Axiata Bhd and Telekom Malaysia Bhd.

Other suitors seeking a piece of Malaysia’s 5G business include Nokia, which is positioning itself to provide services for the trade-reliant nation’s ports industry.

Malaysia plans to initially allocate 700MHz and 3.5GHz spectrum bands to a single entity comprising a consortium of multiple licences.