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Huawei recently held its annual MBBF Forum. Even though we were not able to attend in person, it was an interesting event. Below we will add some color to five radio access network (RAN) related takeaways including 1) 5G=1+N; 2) Massive MIMO is a massive success; 3) There is more room left in the sub 6 GHz tank; 4) Site simplification will play an increasingly important role; 5) The outlook for vertical 5G activity is improving.

5G = 1+N (One foundational network plus N capabilities on demand)

If there is one thing we can all agree on after these first two years of commercial 5G deployments, it is that 5G means different things to different people.

While there is little disagreement that 5G now initially is just another G, providing operators with a compelling technology and business case to expand their respective mobile broadband networks to address todays use cases, the interpretation about the 5G opportunity tends to become more interesting as we look beyond the smartphone MBB use case. Because even if the narrative has morphed somewhat and the lion share of the capex in this initial wave is addressing what we know today, the long term vision still holds, namely that 5G has the potential to expand the role of connectivity beyond the MBB usage scenario and pave the way for new applications and use cases and expand the wireless based economy.

In order to address both the known and unknown opportunities with extremely diversified service requirements, Huawei is recommending operators build one foundational wide-area mobile broadband network with ubiquitous connectivity. The vision here is resting on the assumption that this foundational network combined with flexible on demand capabilities leveraging various spectrum bands (such as those designed for FDD or Super Uplink) to address diversified 5G service requirements for various people, things, and industries will ultimately enable the operators to provide optimized solutions from a technology and business case perspective for the various 5G opportunities.

5G Network: 1+N
Huawei MBBF 2020


1+N Differentiated Capabilities for On-Demand ToB Deployment
Huawei MBBF 2020


TDD Massive MIMO is a mainstream technology

For a technology that was initially viewed as being mostly a fit for hotspot scenarios, Massive MIMO has come a long way, accelerating at a much broader and faster pace than initially expected. Preliminary estimates suggest Massive MIMO RAN investments remain on track to surpass $10 B for the full-year 2020, up nearly 20-fold in just two years. Cumulative Massive MIMO transceiver shipments are projected to approach 0.1 B to 0.2 B in 2020.


Massive MIMO RAN Revenue chart, Dell'Oro Group


Not surprisingly, Massive MIMO based technologies are powering the vast majority of the 100+ commercial 5G networks. And more than 75% of the projected 0.2 B+ 5G subscriptions by year-end 2020 will likely utilize the upper mid-band.


5G Subscriptions by Spectrum, Dell'Oro Group


While Massive MIMO has surprised on the upside when it comes to form factor, weight, performance, cost, and price, one of the key takeaways from the event was that this technology has more room to advance and will continue to play an extremely important role going forward.


Massive MIMO Peak Site Capacity, Dell'Oro Group


Sub 6 GHz enhancements

During the event, Huawei discussed the prospects of another potential 2x of cell capacity using its Adaptive High Resolution (AHR) algorithm to enable a premium experience in locations with high user density and interference.

There is indeed something to be excited about. In this scenario, theoretical 3-sector peak capacity would approach 17.1 Gbps if used in conjunction with the AHR (100 MHz of BW, 8 users). This is consistent with Ericsson and T-Mobile’s recent 16-layer MU-MIMO demo with peak cell throughputs of 5.6 Gbps.

More importantly, Huawei also shared data from real deployments, showing that these types of algorithms can improve the performance outside the lab in non-ideal conditions producing around 3.8 Gbps of cell capacity in 100 MHz of bandwidth.


Huawei MBBF 2020


Huawei also signaled some optimism about the FDD Massive MIMO opportunity, announcing the FDD-based 32T32R system, primarily targeting operators with limited upper mid-band spectrum. As a reminder, FDD-based Massive MIMO systems are not new and this concept has been around for some time. However, FDD-based Massive MIMO technologies have not gained the same mass-market acceptance as TDD-based solutions. In addition to the relative efficiency gap between FDD and TDD as a result of leveraging channel reciprocity in TDD systems, FDD-based solutions typically also operate in a lower spectrum band, increasing the physical size of the antennas.


Mobile Data Traffic


Measuring 0.5 meters in width and weighing around 50 kg, it remains somewhat unclear at this juncture how operators will prioritize FDD-based Massive MIMO in the broader long-term capacity roadmap. Even though preliminary Huawei tests suggest 32T32R can deliver 3x to 4x of capacity growth relative to 4T4R, we expect that FDD Massive MIMO adoption will remain limited for some time and likely be a stronger candidate for mass-market acceptance once operators exhaust the upper mid-band spectrum. At that point, operators can assess what the best tool in the toolkit might be to deliver the next most economical and sizeable capacity boost – FDD Massive MIMO, 6425-7025 MHz, or mmWave.

Site simplification

One of the reasons this shift from passive 4G to active antenna based 5G has accelerated at a much faster pace than initially expected is the fact that operators can for the most part leverage their existing macro grid, which has been a major benefit both from a time-to-market and TCO perspective as it reduces the need to add more outdoor sites to realize 5G NR coverage that is equivalent to the outdoor sub 3 GHz LTE coverage. This model of adding new technologies to the existing sites at a faster pace than legacy technologies are sunset will naturally complicate the situation as the sites are becoming increasingly crowded. Although suppliers have invested heavily to address some of the shortcomings at the site with more power-efficient systems and smaller form factors to manage the challenges with adding both Massive MIMO and non-Massive MIMO configured systems, there is more work to be done to support the various frequency and passive/active antenna systems.

During the MBBF event, Huawei announced various RAN enhancements as part of its continuous journey to simplify site deployments including the Blade AAU Pro, which combines a 64T64R 200 MHz Massive MIMO antenna with passive sub 3 GHz band support. As a reminder, Ericsson has its Hybrid AIR antenna system and Nokia and CommScope recently announced they are working on a new hybrid passive/active antenna solution addressing similar site challenges. Huawei is claiming this is the first 64T64R and full sub 3 GHz hybrid unit.

Also, Huawei released its highly integrated Blade Pro portfolio for FDD applications. This portfolio includes the Blade Pro Ultra-Wideband RRU, which reduces the number of required devices at the cell site by integrating three low-band or three intermediate FDD bands into one box, providing operators with more tools to simplify and manage increased site complexity.

Ultra-Wideband Blade Pro Increase FDD Multi-Band Deployment Efficiency
Huawei MBBF 2020


In addition to the increased focus on form factor, power consumption, and radio integration, this on-going shift towards multi-technology sites addressing legacy technologies and all the various 5G solutions targeting a wider scope of use cases spanning across potentially multiple industries will also complicate the overall site simplification objective from an operations & maintenance (O&M) perspective. In order for the operators to maintain the performance for 2G-5G consumer networks and simultaneously target capabilities for vertical opportunities while balancing the user experience and optimizing the use of the all the resources to ensure the right KPIs are delivered without breaking the energy or opex budgets, increasing the reliance on more intelligent solutions will be paramount. During the event, Huawei reiterated the importance of introducing more intelligence to simplify the networks and manage the increased complexity without growing opex. AI-assisted autonomous driving of networks will play an increasingly important role to address the challenges O&M poses in the 5G era.


The outlook for vertical 5G is improving

5G eMBB (and FWA) is driving the lion share of the current 5G RAN capex (>99%), still, one of the more exciting takeaways from this event was the progress beyond the eMBB/FWA use cases. At a high level, it is still very early days for private wireless, which is currently dominated by LTE. The private 5G market is even more nascent but with standards ready, 5G and private spectrum becoming available, an ecosystem that is accelerating, and signs of activity picking up pace as new use cases are emerging, there is some optimism that private wireless and 5G NR 2B capex can become more meaningful in the next couple of years.

Huawei’s 2B segmentation is consistent with how the broader industry is now characterizing this market opportunity, consisting of three high-level tiers including the Wide Area Public Network, Wide Area Slicing Network, and Local Area Private Network. Some suppliers are also considering splitting the Wide Area segment into two tiers to capture the various coverage ranges.

Network Capability Evolution
Huawei MBBF 2020


What makes the private and 2B markets so exciting is that the opportunities are so vast for both the operators and the suppliers. At the same time, private wireless is different than the traditional public wireless market not only from a technology and standards perspective but also from an ecosystem, go-to-market, and deployment perspective.

Revenues are small relative to overall 5G investments but activity is on the rise. Huawei is engaged in thousands of private 5G projects across China focusing on smart factory, smart port, smart mining, smart utilities, and smart healthcare — consistent with its four-dimensional strategy to move from demo to deployment assessing the opportunity and readiness from a business, technology, standard, and ecosystem perspective. Judging by the proof of concept data shared at this event and progress communicated by other RAN suppliers, the smart factory appears to be emerging as a common theme.

As we have discussed in the 5-year forecasts, it will take time for these non-traditional opportunities to offset declining macro coverage capex post the peak MBB rollout phase. Nonetheless, the progress is promising, bolstering the thesis that the aggregate upside of these smaller opportunities could provide some cushion in the outer part of the forecast period.

The event was also a good reminder that the smaller Open RAN suppliers need to ramp investments to ensure they can deliver simplified and energy-efficient passive/active/hybrid solutions in a competitive form factor that maximizes the use of the sub 6 GHz spectrum.

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We just published the 3Q20 RAN report. Preliminary readings indicate that the positive momentum that has characterized the radio access network (RAN) market since the upswing began in the second half of 2018 extended into the third quarter, with surging demand for 5G propelling the RAN market to robust year-over-year growth, validating the message we have communicated now for some time about the disconnect between the underlying economy and the RAN market in this recession.

In this report, we estimate that the overall 2G to 5G RAN market advanced 10% to 20% Y/Y in the third quarter. With the strong showing in the quarter, the RAN market has now advanced on a year-over-year basis in eight out of the last nine quarters, reflecting positive momentum in multiple markets.

The asynchronous nature of the 5G rollouts in the US, reflecting the FCC’s decision to deemphasize the importance of the mid-band spectrum, has not impacted the overall capex envelope in the US market. On the contrary, this spectrum strategy is pushing the US operators to make the best of the cards they were dealt, and optimize how they allocate the capex between capacity and marketing-driven investments. Following three consecutive years of robust growth in the North America region resulting in a revenue surge of 30% to 40% between 2016 and 2019, the North American RAN market remains on track for a fourth  consecutive year of growth.

5GNR RAN Revenue Share 2020

The shift from LTE to 5G NR, low-band and mid-band, continued to accelerate at a torrid pace, with 5G NR revenues more than doubling Y/Y in the first nine months, accounting for 30% to 50% of the RAN market in the quarter. To put this into perspective, it took more than four years for LTE to reach the same revenue share of total RAN.

Initial estimates suggest that vendor rankings remained stable between 2019 and the first three quarters of 2020, while revenue shares were impacted to some degree by the state of the 5G rollouts in China and North America, resulting in share gains for the Chinese suppliers – we estimate that Huawei and ZTE collectively gained approximately 5% points of revenue share between 2019 and 2020 (YTD).

We have adjusted the near-term RAN market outlook upward, to reflect stronger than expected activity in China, Europe, and North America, with total RAN projected to approach $70 B to $80 B for the combined 2020 and 2021 period.

Small cells are expected to continue playing an important role in 2021, approaching 10% to 15% of the overall RAN market. The outlook for mmWave remains favorable, with more than 100 operators investing in the technology.

small cell RAN revenue share 2020

Open and virtual RAN continues to gain momentum, bolstered by Ericsson now formalizing its support with its Cloud-RAN announcement. The uptake remains mixed. Some suppliers are already shipping O-RAN compatible radios. At the same time, the lion share of any RAN swaps is still going to the traditional RAN players, suggesting the technology remains on track but the smaller players also need to ramp up investments to secure larger brownfield wins.

For more info about the RAN suppliers and the state of 4G, 5G, Massive MIMO, Small Cells, mmWave, CBRS, and Open RAN, please contact for more info.

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Last week, Marvell announced another giant deal with the acquisition of Inphi. We had an opportunity to talk with members of Marvell’s executive team to garner insights on the acquisition, which we share in this blog.

We view this acquisition as strategic and complementary, rather than opportunistic, given Inphi’s strong positioning in electro-optics interconnect both inside data centers as well as connecting data centers. Inphi also has a strong and growing position in 5G backhaul, mid-haul, and front-haul. Its technology and addressable market complement Marvell’s storage, networking, processor, and security portfolio and accelerate its growth in Cloud and 5G infrastructure. Note that more than 70% of Inphi’s fiscal 2020 year-to-date revenue is derived from Cloud and 5G. Marvell’s executive team expects this acquisition to help expand its footprint with large Cloud Service Provider (SP) customers. Four additional networking Cloud customers with greater than $100 M in annual revenue will be created by the combined company.

While the pandemic may have slowed investments in some areas of the network, we have highlighted in our reports that spending on Cloud data center infrastructure as well as 5G networks will remain robust and may even accelerate because of the pandemic.

Our Data Center Capex five-year forecast projects spending on Cloud data center infrastructure to grow at 11% CAGR, reaching $140 B by 2024. Additionally, Dell’Oro Group’s 5-Year RAN Forecast shows that 5G NR investments are anticipated to advance five to ten fold over the next five years.

Nevertheless, although growth in Cloud SPs as well as 5G networks presents attractive opportunities for many suppliers, it also carries margin challenges, technology challenges, and the rising need for custom solutions:

Margin challenges:

It is widely known that Cloud SPs have a relentless need to lower the cost of deploying and operating their data centers. Incremental savings on each piece of purchased equipment translates into significant improvement in their return on investment (RoI) as well as other profitability metrics. This is because of the scale at which they operate data centers with hundreds of thousands of server installed base. Our interviews with players throughout the supply chain revealed how vigorously suppliers are struggling to win Cloud SPs business (viewed as strategic) without taking a margin hit. This low-margin business is driving small companies to get acquired and large companies to try to grow even larger as scale is the only way to remain competitive. There are tremendous synergies when you can sell more products to a single customer. There are also synergies when you can partner with the same manufacturers. Additionally, the development costs of some advanced—and, in some cases, custom—products required by Cloud SPs is so high that they can be offset only through scale. Marvell’s executive team expects both Marvell and Inphi to benefit from the larger scale in R&D—in particular, in process technology. Note that Marvell recently announced its 5 nm platform and started its research in 3 nm. This will help Inphi drive higher performance, lower power, and potentially more custom products.

Technology challenges:

The transition to a digital world with artificial intelligence (AI), mobility, and distributed computing at the edge has accelerated the explosion of traffic and data movement inside Cloud SP networks, across data centers and at the edge. This means that networks must become faster to satisfy the insatiable demand for bandwidth. Our data center switch five-year forecast report shows that about 30% of data center switch ports shipped by 2024 will be at 400 Gbps speeds and higher. However, as network speeds continue to increase, they will create challenges. For example, pluggable optics (currently the form factor of choice for network connectivity inside the data center) will hit density and power issues. When this occurs, the industry will be forced to adopt alternative technologies, such as co-packaged optics (CPO), with optics co-packed and integrated on the switch chip. We expect this trend to favor vertically integrated companies, at least in the early stages of adoption, due to the lack of a standardization level that would allow for a more diverse ecosystem. I mentioned this trend at the beginning of the year in my blog (Ethernet data center switch trends in 2020 and beyond) and predicted that CPO will drive numerous acquisitions, consolidations, and partnerships among switch chip vendors, switch system vendors, and optical transceiver vendors. Note that Marvell has a switch chip business, which may be bolstered by Inphi’s strong optics technology.

Rising need for custom solutions:

The data and compute intensity of modern AI and machine learning workloads is putting tremendous pressure on the performance of Cloud data centers. While computing demand continues to surge, CPU performance improvements are slowing down, as Moore’s law is reaching its limits. We expect this to drive new ways to design modern data centers to become giant compute engines with hundreds of thousands of compute nodes. This, in turn, will drive innovations to interconnect the different nodes without compromising latency and performance. As Cloud SPs will try to differentiate themselves through these architectural innovations, their need for custom—and sometimes proprietary—solutions will increase, potentially forcing their suppliers to own different pieces of technologies that they can integrate. Additionally, this differentiation will require a large scale to drive synergies, while developing custom-made solutions.

Marvell’s acquisition of Inphi was the chip sector’s second acquisition last week, following Advanced Micro Devices’ acquisition of Xilinx. The deal followed on the heels of an already active year of giant tech acquisitions with Nvidia’s acquisition of ARM and Analog Devices’ acquisition of Maxim Integrated. We expect more acquisitions to follow as the only way to survive in this highly competitive market is to join forces and get “stronger and better together.”