Coronavirus could delay China 5G rollout

People visit the Huawei stand during PT Expo China (PTEXPO) at China National Convention Center on November 2, 2019 in Beijing, China. PT Expo China 2019 will be held from October 31 to November 3 in Beijing.

Zhan Min | VCG | Getty Images

The coronavirus outbreak could slow down China’s deployment of 5G networks, analysts warned, potentially denting the progress of one of President Xi Jinping’s national priorities.

5G refers to next generation mobile networks offering super-fast data speeds with the promise of being able to underpin other technologies like driverless cars. It is seen as a critical part of infrastructure in countries and could support further economic development.

In November, China turned on its 5G networks ahead of schedule. 5G is a national priority for China as it looks to boost its credentials in core technology from software to semiconductors.

But with the outbreak of the new coronavirus, which originated in China and has claimed the lives of over 400 people, the deployment could be delayed, according to analysts at China Renaissance.

“The 5G base station installations in multiple cities in China may be impacted by the virus, in our view, which could be a drag on China’s 5G deployment,” the financial services firm said in a note published Monday.

“We expect the extended Chinese New Year holiday and a series of quarantine measures to cause delays to the 5G base station installations on towers.”

China extended the Lunar New Year holiday with many companies telling employees to stay home.

Vinod Nair, a senior partner at Delta Partners, an advisory and investment firm specialized in the telecoms, media and tech sectors, said that production of equipment is less likely to be an issue. Instead, having employees remain at home could reduce the amount of people physically able to put up infrastructure in China.

“Coronoavirus impacts the supply chain and it specifically impacts labor intensive services like network deployment,” Nair told CNBC.

5G has become a highly politicized issued between the U.S. and China. Washington has sought to get China’s Huawei, the world’s largest telecoms equipment maker, banned from as many markets as possible around the world. The U.S. maintains that Huawei represents a national security risk because its gear could be used by Beijing to spy on Americans. Huawei has repeatedly denied this allegation.

Last year, U.S. President Donald Trump declared that the “race to 5G is on and America must win.”

U.S. mobile carriers such as Verizon and AT&T have already begun rolling out their 5G networks across the country.

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