Vendors, also known as suppliers, are the companies that provide telecom equipment for mobile network operators. They design and build both the hardware and software that goes into the antennas, base-stations, and networks that are run by the national telecom operators.
This is a market dominated by a few, large companies, which need to invest heavily in R&D to be able to compete.
The most important ones are:
● Ericsson from Sweden
● Nokia from Finland
● Huawei from China
● ZTE from China
Besides these, the following companies are sometimes considered as major telecom vendors, but only in specific sub-markets:
● Samsung from South Korea
● Cisco from the US
The four most important telecom vendors are integrated companies that produce a wide array of equipment, and therefore have the capability to build an entire mobile network. There is a low level of specialisation in this particular market.
Broadly speaking, you can divide the telecom vendor market into the radio access network (RAN) and core network markets. The RAN market involves equipment in the part of the network that is closer to the user, such as antennas and base stations. The core network, on the other hand, is the 'brains' of the mobile network that coordinates traffic.
The RAN market is dominated by the big vendors. Dell’Oro, for example, found that “Huawei, Ericsson, Nokia, ZTE, and Samsung accounted for more than 95% of the market” in Q1 of 2020.
The same companies largely dominate the core network market too. In Q3 of 2019, Ericsson was the leader in this market, while Huawei had a slightly higher market share in the RAN market. Cisco is also active here, while Samsung is mainly active in the RAN market.
An interesting trend that 5G is starting, is the shift to cloud RAN, and the associated Open RAN movement. Generally, software and hardware are coupled in the telecom market, so a large vendor will supply both the hardware and (proprietary) software that comes with it. 5G, however, is less hardware-reliant and certain network functions do not require specialised hardware. Some functions can even run on a regular server.
This has opened the market up for new players to produce their own software. Although still only a small part of the RAN market, it is an area that is growing. It is also offering opportunities for US companies that were largely excluded from the telecom vendor market before. Grand View Research (market research and consulting company) mentions the following companies as being important in this space:
ASOCS Ltd. (Israel)
Cisco Systems, Inc. (US)
Huawei Technologies (China)
NEC Corporation (Japan)
Samsung Electronics (South Korea)
Nokia Corporation (Finland)
ZTE Corporation (China)
A component of this is the movement to make RAN equipment 'open', which has been called 'Open RAN'. The idea is that instead of having hardware and software coupled by a large vendor, there could be a competitive software market that runs on generic hardware. Two big organisations promoting this view are:
Telecom Infra Project
Mobile networks depend on chips, sometimes known as semiconductors. They are integrated with mobile phones and networks, and fulfil a host of very specific functions, such as translating electrical signals into wireless signals.
Producing these types of chips is a high-tech business that requires significant amounts of R&D. High-end chip producers for networks are concentrated in a few countries, such as:
The US, with companies like Qualcomm and Dell
Taiwan, with TSMC
The UK, with ARM (recently acquired by NVIDIA)
The chip market is generally divided into three parts – design, fabrication and assembly – with companies specialised in each section of this chain.
In this context you see companies are either specialising in certain parts of the chain, or integrating the entire chain.
Integrated Device Manufacturers (IDMs), like Intel and Samsung, do the whole thing. However, over time this has become less attractive because of the increased complexity of building chips.
Fabless companies only design chips, and then hand them over to other companies for manufacture. Examples of these are: Qualcomm (US), Nvidia (US) and HiSilicon (China).
Foundries are companies that manufacture the chips. Of these, the Taiwanese TSMC is by far the largest, and occupies a key position in the supply chain of electronics (and 5G-networks).
OSATs (outsourced semiconductor assembly and test companies) then test, assemble, and pack the resulting chips. This market is less dominated by particular companies.
There are other components in the chip supply chain that are also important, such as wafer construction, software design or machine building. Those serve as suppliers for the chip manufacturing process. The USA, Taiwan and South Korea dominate the chip value chain, and only in particular niches does Europe (and to a limited extent China) compete. Europe for example has the second largest machine builder of chips (ASML from the Netherlands), and the leading IP company, ARM (from the UK).
Delloro, Key Takeaways – The Telecom Equipment Market 1Q20
Delloro, COVID-19 Not Expected to Curtail RAN Momentum
C-RAN Market Size, Share & Trends Analysis Report By Architecture Type (Centralized-RAN, Virtual/Cloud-RAN), By Component, By Network Type, By Deployment Model, And Segment Forecasts, 2020 - 2027
Fiercewireless, Ericsson holds slight lead over Huawei in mobile core market
Light Reading, As Nokia bolsters 5G spend, other R&D is suffering
Stiftung Neue Verantwortung, The Global Semiconductor Value Chain: A Technology Primer for Policy Makers