From the US-China battle to the metaverse, these are the trends likely to shape the year to come.

Figure 1: The future looks complex.
(Source: zhang kaiyv on Unsplash)

1. Trouble in the supply chain

It wasn't that long ago we were wondering if the supply chain could keep pace with post-COVID demand. Now it's 2020 all over again as anxieties over the China supply chain reemerge. After a panicky couple of months when the Foxconn assembly line almost ground to a halt, production of Apple's iPhone – still the industry bellwether – seems to be back on track.

But the potential for COVID to ravage the China workforce remains one of the biggest threats to the tech sector this year.

Watch for: Any sign that authorities are losing the battle to contain the disease.

2. US vs. China

China is wilting under the impact of the US hi-tech blockade, with Huawei forced to reshape its entire business and the government abandoning its strategy to grow its chip industry through heavy state investment.

These successes make it even less likely that the US will ease off in any of its measures to cut access to US markets or advanced technologies for any Chinese military or security service-linked companies.

Watch for: Can the US bring the Netherlands and Japan aboard its anti-China crusade?

3. The metaverse play

Will the metaverse be that high-concept service that will consume operator bandwidth and fire up the bottom line?

The poster child for the telco metaverse is SK Telecom, which reports 13 million users on its Ifland platform, now available worldwide with operator partners including e& and Singtel.

A key marker is VR/AR headset sales. IDC says they shrank 13% in 2022 but are due to rebound by nearly a third in 2023. Much may depend on Apple's long-awaited mixed reality headset, which may or may not debut this year.

Watch for: Signs of Ifland's progress worldwide – and the Apple headset.

4. Deal-making

2022 marked the end of a cycle of asset sales and M&As across the region as individual telcos and markets restructured themselves for the new era of 5G, cloud and all-fiber.

Over the past three years, consolidations in Australia, Malaysia, Thailand, Indonesia, New Zealand and Taiwan have all taken place. Operators have also raised billions of dollars from sales of tower assets.

What next? With 5G yet to deliver the uplift expected, telcos have good reason to pursue further mergers or sell-offs to improve the bottom line.

Watch for: Can telcos find creative new deals to get scale and efficiencies?

5. Rakuten's fate

For what it's worth, Japan is probably the world's most active open RAN market. Besides Rakuten Mobile, the pioneer and evangelist, both NTT Docomo and KDDI are pursuing their own O-RAN programs. But the spotlight is on Rakuten. It may show signs of arresting its mounting losses and it has built a nice side hustle selling its solutions and expertise, but can it find its footing in this over-served market?

Watch for: Progress in bottom-line and market share.

6. The Huawei turnaround

After more than three years in the barrel of the US entity list, Huawei says the worst is behind it. Carrier equipment remains at the core of the new Huawei, but it's also added cloud and broader enterprise capabilities to its product set.

It identified the industrial Internet and digital energy as major opportunities as companies pursue digitalization and sustainability.

Watch for: Will Huawei's auto business finally get into gear?

7. China's telco reinvention

China's telco giants have always played a different game from their foreign counterparts. As 5G investments start winding down, they are now pouring cash into giant national computing and data center networks to support government programs.

They are also reaping the rewards of the digitalization boom – all three operators doubled their cloud revenues in the first half – and pursuing 5G networking opportunities. These telco businesses are transforming at pace.

Watch for: How big are the new digital infrastructure projects?

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— Robert Clark, contributing editor, special to Light Reading