Major networking chip manufacturers have been holding earnings calls to discuss the global market situation of telecommunications tenders. As China accelerates its efforts in the commercialization of 5G, telecom tenders have garnered the attention of the market. IC distributors stated that telecom projects in China will be subdued in the second half of 2023, with Wi-Fi 6 as the majority. Wi-Fi 7 may only be gradually adopted by the market in 2024.
In recent years, major IC design houses have been accelerating their development for the latest Wi-Fi standards, designing and mass-producing products for Wi-Fi 7. Based on their progress, it's estimated that a small number of mass-produced products will be shipped by the end of 2023 or early 2024. The hope is that Wi-Fi 7 will eventually become mainstream in the future.
Supported by government policies, China's top three telecommunications companies have continued to invest in 5G infrastructure and opened various communication equipment tenders in 2023. However, the industry observed that as of now, telecom service providers have not been particularly active, resulting in overall demand being rather subdued.
IC distributors pointed out that with the support of policies and the industry, China's telecom tender sector is not bearish. Despite that, it may not experience substantial growth as well. Currently, the market situation is at a normal level, as Chinese telecom service providers haven't been particularly active or passive.
Industry sources stated that the market is still dominated by Wi-Fi 5 and Wi-Fi 6. The widely discussed Wi-Fi 7 has not heard any demand from telecom service providers in the third and fourth quarters. The expectation is that the adoption rate will increase once Wi-Fi 7 launches.
Taiwanese IC distributors like GMI have a large portion of their revenue attributed to communication applications. GMI previously pointed out that the communication equipment tender market for Chinese telecom service providers is expected to continue to grow in 2023. The goal is to increase its market share in the communication equipment tender market by 10% compared to previous years, primarily through the Wi-Fi 6 product line.
GMI stated that inventory issues have improved significantly compared to early 2023. The clearance process is expected to take another quarter, concluding between 3Q23 and 4Q23.
According to the "China Wi-Fi IoT Industry Research Report 2023," for the next five years, Wi-Fi 4/5/6/7 products will coexist. Among them, the shipment volume for Wi-Fi 6 and Wi-Fi 7 will grow rapidly over the next two years. It's estimated that by 2027, Wi-Fi 6 product shipments will approach 50%, while Wi-Fi 7 product shipments will approach 20%.
As China accelerates its push for domestic substitute chips, the proportion of made-in-China communication equipment tenders has continued to rise. Major telecom service providers are enhancing their competitiveness. However, at this point, China's telecom tender market in the second half of 2023 still appears to be relatively moderate.
