Despite its tensions with the United States, China still wants to show the world that it intends to become the first 5G superpower, with the government recently handing out commercial licences to its three telecoms carriers, as well as a cable television network.
Michelle Wei, telecoms analyst at JPMorgan, said issuing the licenses aims to “send a message to the world that China is capable of pushing forward 5G, and also to motivate domestic supply chain players,” according to The Financial Times.
In addition, Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, estimated that Huawei, which is China’s dominant 5G supplier, would win tenders for 37 out of the 40 cities in the first phase of the country’s mobile 5G rollout.
“Foreign vendors are likely to be excluded, or just given a symbolic share,” he added.
But analysts and industry insiders have warned that China’s development of 5G could be delayed after the Trump Administration added Huawei to a blacklist, which means it won’t conduct trade with the company. The blacklist makes it very difficult for Huawei to do business with companies in the U.S. As a result, Google suspended all business with Huawei that requires it to transfer hardware, software and technical services.
While analysts have estimated that Huawei has stockpiled enough parts and is covered by licensing agreements until the end of the year, it will likely face problems after that, particularly with receiving power amplifiers and electronic design automation tools.
And Edison Lee, a telecoms analyst at Jefferies, said that Chinese telecom companies probably won’t be willing to switch vendors if Huawei cannot deliver.
“Chinese telecom companies, if they cannot buy from Huawei and ZTE, will they just use Nokia and Ericsson? I don’t think so, because one reason for 5G is to grow the domestic supply chain,” said Lee.