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China’s sizeable aging non-driving population and relatively smaller percentage of licensed drivers (compared to other developed countries) provide a solid platform of demand growth for autonomous vehicles (AV). In fact, the country’s high road accident casualty rate (one of the highest in the world) has led people to embrace AVs as safer drivers than humans.

The industrial IoT is not automation in its traditional form; it is characterized by increased software content (focusing on AI), machine-to-machine and human-to-machine interactions, and edge computing. And 5G is at the heart of this trend as the technology enabler. Faster speeds produce faster interactions between different production interfaces, and lower latency allows a vast number of involved devices to “talk” with one another at the same time. This last point is particularly critical, as it is needed to make the production process the most autonomous possible both in confined and unconfined environments.

Given that IIoT requires substantial investment in facilities, companies adopting IIoT have to be larger in scale in order to have the financial capability to endure the substantial capital outlay. So asset, equipment and efficiency management firms have been the first to adopt IIoT. The benefits – lower costs, greater quality control – will likely be seen across all industries that produce products, including healthcare & pharmaceuticals, automotive and manufacturing sectors.

With 4G, e-commerce penetration advanced rapidly into rural areas; sales from rural locations climbed 21% y/y in 1H19, outpacing the national growth rate by 3.2 percentage points. For people living in the countryside, online platforms make goods and services available that in the past wouldn’t be in their regions. So with 5G, markedly improved speeds should translate to even more online shopping, which in turn would boost operators’ topline growth.

It will also allow e-commerce companies to collect and analyze a wealth of customer preference data, potentially resulting in more tailored and targeted marketing strategies. Comprehensive online marketplaces, empowered by 5G, could bridge the offline and online gap, presenting new omnichannel opportunities to retailers.

JD.com has seven different types of drones that are capable of delivering packages across four Chinese provinces. Drones can potentially improve efficiency by flying along fixed routes from warehouses to various landing pads, from which local contractors then deliver these packages to the designated address. We expect to see the increasing use of drones as part of logistics operations, given that 5G can connect many more devices at relatively low power compared to existing 4G LTE networks.

Attractive features and affordable prices should also spur 5G smartphone growth. These attributes, we believe, will be a crucial catalyst for 5G smartphone demand, despite the high penetration rate of smartphones currently. �۶���Ƶ Evidence Lab data indicates the general public is more interested in 5G than other new features. Ericsson reported that the general market sees value in 5G through alleviating urban network congestion, mobile VR and faster connectivity.

However, there are some major differences in the underlying circumstances which might lead to a different 5G adoption rate than in the previous cycles. One is China’s early lead in 5G; it was a relative latecomer with 4G. This means that people may take time to warm up to the technology. Goldman Sachs estimates China can reach full penetration of 5G in 8–10 years, i.e., by 2023–25, which is longer than the previous adoption cycle of around five years.

Among the key components, the 5G chipset is expected to enjoy substantial demand growth given the increasing demand for faster data transfers, the reliance on cloud technology and the sharp increase in base stations. The leading US and Taiwanese semiconductor companies plan to mass produce their 5G chips, which are key components of 5G smartphones and equipment supply chains.