5G manufacturing in China – where the Industry 4.0 dream is becoming reality (Analyst Angle)
The story of 5G in manufacturing is not new. In fact, it has been written and discussed many times, as enterprises first heard about the groundbreaking enhancements that 5G can bring to improve workflows and efficiencies almost three years ago now. Market education then intensified at the world’s largest industry trade fair, Hannover Messe, in 2019, with the 5G Arena.
Providing advanced connectivity to the factory floor has become increasingly important in the context of the 4th Industrial Revolution (referring to digitization of manufacturing and increasing automation of production processes). To name some examples: a flexible production layout requires seamless connectivity in all corners of the factory site, automated quality control of finished products requires high bandwidth to transfer particularly data-intensive image files, and predictive and preventative maintenance of production equipment requires a particularly reliable and highly available network connection.
Automotive manufacturing is at the forefront, as the need for more flexible production layout is particularly articulated within automotive original equipment manufacturers (OEMs) and car parts manufacturers. With a legacy production layout, each singular factory is confined to produce only one specific car model. In addition to that, setting up a new factory for an additional car model takes six to seven years, which is the same time it takes to conceptualize new car models.
In other words, the time-to-market for new types of cars can be drastically reduced (by almost 50% in the most optimal cases) if factories are designed in a way that allows them to produce more than one car model. In addition, connecting different workstations using conventional fixed still is somewhat expensive: each cable drop costs several hundred dollars. Therefore, modernization of communication technology within these factories is key to unlocking the tremendous opportunities that Industry 4.0 promises to manufacturers across the globe.
Industrial 5G opportunities
By now, the potential enhancements that 5G can bring to the factory floor have been communicated over and and again: enhanced mobile broadband (eMBB) capabilities bring high bandwidth for particularly data-intensive applications, ultra-reliable low latency communication (URLLC) aims to guarantee five-nines (99.999%) reliability and availability with latencies of below ten milliseconds, while massive machine-type communication (mMTC) allows the connection of one million devices per square kilometer.
Even though these technology capabilities have been communicated to the manufacturing industry many times, it becomes more and more apparent that the main barrier for manufacturers to deploy 5G enabled smart manufacturing lies in adjacent factors.
A survey among 600 automotive, discrete, and electronic manufacturers undertaken by ABI Research identified an absence of a clear business case and frequently perceived high upfront investment as the main barriers to deployment. In addition, it becomes more and more apparent that for manufacturers, the value proposition of industrial 5G does not lie in the technology itself, but rather in the application it enables.
In other words, a manufacturer is not interested in deploying 5G connectivity on their premises just for the sake of having deployed 5G. After all, they are no networking experts and therefore, the name ‘5G’ carries little to no value for them. What matters to manufacturers (and to other enterprise verticals as well) is how a new technology allows them to address their specific pain points, laid out earlier.
Car parts manufacturer IKD in China, for example, managed to revamp their production through a 5G connected private network, which they use for 12 different application scenarios. In addition to smart warehousing and AGV applications, 5G connectivity will also be used to enable digital twins, AI based quality control, AR assisted production and management, and 3D scanning of finished products.
To support these applications, IKD utilizes a private network deployment, where all networking functions are deployed onsite of the factory. A so-called Industrial Internet Platform (private cloud that is operated by CMCC Zhejiang and China Mobile) is used for cloud-based AI algorithms and training. For IKD, the value proposition of this wholistic deployment is threefold:
Automating processes – Automating quality control of finished car parts means that IKD is becoming less dependent on the availability of manual labor. As social distancing measures in response to the global COVID-19 have highlighted, automation of production processes can be an important factor to guarantee business continuity if manual labor is not available. In the UK, for example, several car manufacturers had to close their operations temporarily because of low staffing levels. Furthermore, automation does help to decrease operational cost, as utilizing a manual labor force is particularly expensive.
Efficiency enhancements – As digitization optimizes production workflows, this increases efficiency and production capability. By embracing 5G enabled smart manufacturing applications, for example, IKD managed to decrease the turnover time of a single product by more than 66%. While the average product took 10 days until it was ready to leave the factory, with 5G enabled applications, the same can now be achieved in 3 days.
Quality improvements – In addition to increased output capacity (and therefore efficiency enhancements), 5G-enabled AI-based inspection of finished products also managed to increase the quality of goods and products leaving the factory, as it increases the rate of detecting faulty parts when compared to human inspection. By employing an AI and cloud-based solution, IKD managed to increase the detection rate by 15%.
Tale of two worlds
Looking at 5G deployments to power smart manufacturing and machine vision use cases across the globe, it almost seems like two completely different stories can be told: while the number of 5G network deployments almost seems to explode in the Asian-Pacific region (specifically China), deployments in Europe and North America are lagging. But why is this the case? The answer is multifaceted and requires a somewhat elaborate answer.
Firstly, the supply chain for enterprise connectivity in China is much clearer and more linear than in other geographical regions. In China, the mobile network spectrum is predominantly licensed to mobile network operators. In a first tentative move away from this operator-centric licensing of mobile network spectrum, the Ministry of Industry and Information Technology (MIIT) licensed mobile network spectrum to TV and radio operator China Broadcasting Network (CBN) for both indoor and outdoor deployments.
While it seems this is a first step towards giving enterprises access to licensed mobile network spectrum without having to involve a network operator, in reality most enterprise deployments are still operator driven in China. What at first might seem to be stripping manufacturers of their ability to choose between different deployment alternatives, it actually simplifies decision processes for them.
After all, deciding whether to deploy a network on their own or choose between a System Integrator, hyper, or telecoms infrastructure vendor can often be overwhelming to enterprises that focus on manufacturing drives, ball bearings, or any kind of car parts, and therefore deter from deployment.
Secondly, infrastructure vendors and network operators have understood that the real value for enterprise 5G lies in specific applications rather than connectivity technology. Within China, network operators and infrastructure are considered the primary enabler for enterprise digitization. While part of this might be ascribed to the fact that mobile network spectrum is still exclusively licensed to network operators (hence, an external factor), there is an internal factor at play as well.
After all, enterprises could decide not to deploy cellular connectivity at all if they didn’t trust network operators in this endeavor: infrastructure vendors, as well as operators, want to design cross industry standards that are not only accepted but co-developed by implementing enterprises. Infrastructure vendors and network operators in China seem to have realized the importance of concrete enterprise-grade services and applications.
Infrastructure vendor Huawei, for example, founded the 5G Deterministic Networking Alliance (5GDNA) in 2019, together with multiple network operators to build and popularize 5G deterministic networks, forge a beneficial industry ecosystem, accelerate business growth, and advance 5G industry development.
Thirdly, the Chinese Government is living up to its responsibility to provide sufficient funding opportunities and foster the development of cross-industry standards and enterprise-grade applications. Most notably from an enterprise connectivity point of view, by 2023, the Chinese Government aims to have 3,000 private 4G and 5G network deployments among enterprises.
To achieve this, the Chinese Government announced a proposal making additional funding available for enterprises wanting to invest into modernizing their technology infrastructure. Furthermore, the Set Sail Plan intends to foster the exchange between the telecoms industry and enterprise verticals. In addition, the Chinese Ministry of Industry and Information has launched the so called “Blooming Cup” competition, which aims to foster the development of enterprise-grade 5G applications.
The Competition focuses on three 5G scenarios—enhanced mobile broadband, short delay with high reliability, and massive connections with low power consumption—and collects innovative applications of 5G features from industries, enterprises, and individuals promoting integration of 5G into vertical industries and accelerating 5G development.
The telecoms industry across the globe should take these observations as important signs to determine what actions to take to make sure that particularly manufacturers understand the value that 5G-enabled digitization can bring to their production workflows and therefore play an important role to unlock new business revenue.
About the author
As part of ABI Research’s 5G Markets research service, Leo has a special focus on the commercialization of 5G, covering 5G use cases across several enterprise verticals and their financial impact. His area of expertise lies in identifying key enterprise vertical requirements and mapping then to 5G capabilities, and in turn identifying what the future use cases and potential new business opportunities will be for the new generation. As such he is in regular exchange with different enterprise verticals and associations like 5G-ACIA or 5GAA. He is also involved in calculating the economic value of 5G across different verticals and its contribution to global GDP.
About ABI Research
ABI Research provides actionable research and strategic guidance to technology leaders, innovators, and decision makers around the world. Our research focuses on the transformative technologies that are dramatically reshaping industries, economies, and workforces today. ABI Research’s global team of analysts publish groundbreaking studies often years ahead of other technology advisory firms, empowering our clients to stay ahead of their markets and their competitors.