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FOLYSKY（WuHan） LTD.
As the pace of communication iteration and upgrading continues to accelerate, 4G enters the post cycle, and 5G will help the ceramic substrate industry further develop and prosper the ceramic substrate market. At present, 4G networks have basically achieved global coverage, and operators have entered the post 4G cycle. As of the third quarter of 2017, out of 224 countries and regions worldwide, 200 countries and regions have established 644 LTE public networks, with an LTE user count of 2.36 billion, averaging one LTE user per four mobile users. As of the first half of 2017, the total number of 4G base stations in China reached 3.41 million, and the total number of 4G users reached 885 million, with a penetration rate of 65%.
According to the progress of 5G technology research and development, standard formulation, and user growth, we divide 5G investment into four stages: theme warming stage (2017), investment stage in key links of the industrial chain (2018-2021), mature stage of advanced 5G technology (2021-2023), and post 5G stage (after 2023).
In September 2017, the three major operators in China successively released white papers on 5G transmission networks. At the end of December 2017, 3GPP passed the NSA (Non Independent Networking) standard. In 2018, it is expected to enter the investment stage of key links in the industrial chain: (1) In terms of 5G transmission network architecture, compared to the RRU and BBU two-level architecture of 4G access network, 5G will evolve into AAU, DU, and CU three-level architecture, divided into three parts: forward transmission, intermediate transmission, and post transmission. The 5G transmission network architecture has been finalized, and the optical communication industry chain (optical equipment fiber optic cable optical module) has benefited the most; In terms of 5G architecture and air port technology standards, the NSA standard was completed in December 2017, and 5G Air Port Massive MIMO technology and Active Antenna (AAU) technology will be widely referenced. And these two technologies are designed on the basis of aluminum nitride ceramic substrates.
In terms of optical devices, in the 5G era, the network capacity of various levels of optical devices will be comprehensively upgraded, and the application range of OTN optical devices will be expanded from the current backbone layer and metropolitan area layer to the post transmission, intermediate transmission, and even forward transmission of the access layer. According to preliminary calculations, optical devices in the 5G era will achieve at least 50% growth. In terms of optical modules, 5G base stations will use 25G/50G/100G high-speed optical modules. Optimistic estimates suggest that the market size of 25G optical modules is expected to reach $15 billion, while the market size of 50G/100G optical modules is expected to reach $25 billion. Compared to 4G, 5G is equivalent to creating a new market for optical modules. In terms of fiber optic cables, due to the addition of intermediate transmission loops in the 5G transmission network, DU and CU are deployed separately and interconnected through fiber optic cables, the usage of front-end fiber optic cables in the 5G era base stations may reach twice that of 4G. Considering the 1.5 times coverage density of base stations, the total demand for 5G fiber optic cables is expected to reach about three times that of 4G.
The 5G RF front-end mainly includes core components such as antenna oscillators, ceramic substrates, filters, and PA (power amplifiers). Due to the widespread application of MassiveMIMO technology and Active Antenna (AAU) technology, three major changes will occur in the RF front-end:
(1) The increase in the number of RF channels leads to a doubling of the number of RF device sets;
(2) Increased value of RF devices;
(3) The internal value of RF front-end is transferred to ceramic substrates, filters, and power amplifiers (PA). According to our calculations, the market size of 5G RF front-end can reach four times that of 4G, with a total investment scale exceeding 250 billion yuan. Among them, the technical strength of local manufacturers in the ceramic substrate and its upstream field is relatively good, and it is expected to seize more global market share driven by the main equipment manufacturer.
As a leading ceramic substrate manufacturer in China, Sliton has already started to layout in the 5G field, and currently has aluminum nitride ceramic substrates specifically designed for high-frequency 5G. The wind direction of the entire RF front-end substrate market has gradually shifted, and metal substrates will eventually become the past. Ceramic substrates will usher in the 5G aluminum nitride ceramic substrate revolution, just like the 5G revolution.
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