Driven by the digital transformation of companies and the zero-contact economy in 2021 post the COVID-19 outbreak, the global demand for networking equipment and 5G communications products has been growing. Despite the tight supply of components and waves of COVID infections at overseas production sites, Taiwan’s networking and communications industry posted good results overall in 2021. The number of 5G users in Taiwan is expected to reach six million by the year end.
Looking into 2022, 5G Open RAN ecosystem is expected to become the main theme of 5G development in 2022 under the deployment of applications in private networks, as the 5G coverage gradually increases and vertical applications start to emerge. The optimization of low-orbit satellite non-terrestrial networks (NTNs), artificial intelligence and millimeter wave communications are all important trends in B5G (beyond 5G).
As vaccination coverage increases around the world, governments are expanding infrastructure investments to boost the economy. U.S. President Biden announced an Infrastructure Bill worth a total of US$1.2 trillion, including US$65 billion on broadband network infrastructure. The ambition is to create a high-speed broadband infrastructure by combining optical fiber, satellite communications and 5G technology. As the U.S. market is the biggest importer of networking and communications products from Taiwan, this will bring opportunities of direct orders to our country.
The prospects of the 5G market are bright. But Taiwanese manufacturers cannot afford to overlook the global advocacy for zero emissions, low-carbon transformation and ESG (environmental, social and governance) endeavors. This is to adhere to the carbon reduction timetable set forth by the Paris Agreement and United Nations Conference on Environment and Development (UNCED, also known as the Earth Summit). Countries around the world have started to formulate carbon border taxes, in pursuit of the global target for carbon neutrality by 2050-2060.
ESG refers to the assessment of the level of advancement of companies and countries towards sustainability in terms of environmental, social and governance factors.
In response to the global climate crisis, over 130 countries (including the U.S., European countries, China, Japan and Korea) along with multinational brands such as Apple, Microsoft and Philips have all pledged to attain net zero carbon emissions by 2050. Some countries have even incorporated into legislation commitments to carbon reduction, energy supply (smart grids and renewable/alternative energy), production activities (zero carbon production and circular economy), consumption patterns (electrification and the shared economy). The European Union is also launching the world’s first carbon tariff, to be phased in from 2023 and fully implemented by 2026.
In 2011, only 20% of the S&P 500 (Standard & Poor's 500) companies disclosed ESG information. By 2020, the proportion of these companies disclosing ESG data had risen to 95%, showing that ESG has become a global trend.
Under the ESG trend, many international ICT (information, communication and technology) companies have been pursuing transformation by constantly improving the energy efficiency of their products and the use of recyclable materials. For example, the power consumption of Cisco’s 8201 router is 26 times less than its predecessor, the NCS 6008. Intel keeps an eye on water resources by using, recycling and conserving water as much as possible during operations and investing in advanced water recycling facilities. Apple reduces the power consumption of corporate facilities, strives to use renewable energy and assists its supply chain in the same transformation.
The net-zero commitments by multinational brands have a direct impact on the way energy and resources are used throughout the supply chain. As a key member of the international supply chain and an export-oriented economy, Taiwan cannot shy away from its international responsibility towards zero-carbon commitment amid the global economic, political and financial market pressures driven by the net-zero trend.
Whilst the ICT industry is not carbon intensive, the net-zero by 2025 commitment by major multinational brands has a direct impact on Taiwan as a member of the global ICT supply chain. In the past, companies considered investment in ESG compliance an additional cost. However, Taiwan should seek to stay on top of this global trend by making relevant preparations (e.g., the creation of a green supply chain and carbon inventory reviews across the supply chain, and small-and-medium enterprises (SMEs) should start producing ESG reports and disclosing relevant information), in order to capitalize on business opportunities.
Aside from the environment, it is also necessary to pay attention to labor rights, human rights, and health and safety. Companies should also utilize digital technology and implement ESG by measures such as the building of green smart factories, the enhancement of product energy efficiency, the deployment of smart grids, smart green buildings, electric vehicles, autonomous vehicles, and remote collaboration solutions.
In addition, the focus on information and communications security in the context of digital transformation has become a new issue for corporates and manufacturers across the supply chain as one aspect of corporate responsibility and security governance. As an important member of the global networking and communications industry, Taiwan is facing the same zero carbon trends and network security resilience requirements as the global heavyweights. Taiwanese networking and communications manufacturers should stay on top of relevant trends and extend their footprint into related areas in order to capture business opportunities.