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U.S., Britain to promote Japanese equipment for 5G networks
Jan 12. 2021(The Yomiuri Shimbun)
By The Japan News/ANN
To develop high-speed 5G wireless communication networks, the governments of Japan, the United States and Britain will heighten their cooperation in promoting the equipment and technologies developed by Japanese companies, the Yomiuri Shimbun has learned.
The United States and Britain have begun working to exclude the equipment of Huawei Technologies Co. of China from their next-generation 5G networks, but they also maintain a policy of diversifying supply chains. For Japanese makers such as NEC Corp. and Fujitsu Ltd., both of which pale in comparison to their foreign rivals in terms of global market share, this is a golden opportunity to recover lost ground.
The mobile industry’s big three — Huawei, Ericsson of Sweden, and Nokia of Finland — hold an about 80% share of the global market for equipment related to communication base stations, including 5G networks. Should Huawei products be excluded from 5G networks, development of which will get into full swing in the future, sources for procuring products will become limited.
From the awareness of the fact that “being overly dependent on a small number of suppliers for critical national infrastructure will bring about a serious risk,” as the British government has put it, the Japanese and British governments have been negotiating a possible partnership for the diversification of supply chains for telecommunications equipment makers.
In a bid to increase the options for supplying manufacturers, the British government announced in November last year that it would launch a trial with NEC to test and demonstrate its equipment in building 5G communication networks in the country.
The United States also shares an awareness of the problems involved.
Both the Japanese and U.S. governments, at a director general-level meeting held last autumn, agreed to cooperate in diversifying supply sources for 5G equipment, keeping in mind products to be made by Japanese manufacturers.
As both NEC and Fujitsu support the plan of the U.S. government to exclude Chinese companies from the telecommunications networks, the two firms are said to be considered likely options as reliable suppliers.
The Japanese and U.S. governments have also agreed to boost cooperation in “Beyond 5G,” or sixth-generation wireless networks. Japan’s government intends to enhance the presence of Japanese makers in the global market of 5G equipment and have them take the lead in 6G as well.
According to British market research firm Omdia, Huawei accounted for 33% of the global market share for equipment related to mobile phone base stations in 2019, including 5G networks. It was followed by Ericsson at 25% and Nokia at 20%.
Huawei, which ranks first, has a broad range of products and equipment, thanks to massive spending on research and investment. It has been chosen as a supplier by a broad range of customers across the world, also because of its relatively low costs.
Among Japanese makers, NEC has only a 0.7% share, and Fujitsu 0.6%.
Japanese manufacturers have until now been unable to make their presence felt in the sphere of telecommunications equipment. However, triggered by the change in security situations with the rise of China on the global scene, Japanese makers have drawn attention as reliable suppliers among Japan’s allies and friends.
5G wireless devices are expected to be used in every field, ranging from automobiles and medical care services to electricity and water supplies. Due to security concerns, such as cyber spying and cyber terrorism, the United States and other countries have moved to exclude Chinese manufacturers, including Huawei, from their 5G networks.
The United States and Britain’s indication of their willingness to diversify their sources of equipment for their 5G networks will give Japanese companies a golden opportunity to regain lost ground in this field.
NEC has been developing internationally competitive radio-communication base stations under its capital and business tie-up with Nippon Telegraph and Telephone Corporation (NTT). With the establishment of its global open RAN (radio access networks) center in Britain as its foothold, NEC intends to develop equipment suited to the local telecommunication environment and sell it to local telecom companies.
At home, NEC has been developing wireless devices in partnership with Rakuten, Inc. to be used in 5G base stations.
Fujitsu, too, plans to reinforce its business projects overseas. Company President Takahito Tokita said recently that “it is an option” for his company to even join the NTT-NEC alliance to establish 5G communication network infrastructure.