Industrial 5G Rollouts Are Increasing Manufacturers’ Competitive Edge

In January 2020, Haier’s Interconnected Refrigerator Factory in Shenyang, China became its second factory to be recognized as a “manufacturing lighthouse” by the World Economic Forum (WEF) after its Commercial-AC (CAC) Interconnected Factory in Qingdao, China was crowned in September 2018. The “manufacturing lighthouses” are manufacturers identified by the WEF to be early adopters and successful models of Industry 4.0 transformations. Haier was the first and only Chinese business to be included in this list in 2018, but is joined by three other Chinese companies in the latest 2020 edition. Currently, there are 44 factories on the list.

Recently, Huawei and China Mobile deployed their 5G Multi-access Edge Computing (MEC) solution in Haier’s Qingdao CAC Interconnected Factory and are expanding this rollout into other Haier factories such as the Shenyang Interconnected Refrigerator Factory. Its most recent Proof of Concept (PoC) for 5G MEC smart factory use cases was discussed at the 5G MEC Summit in the 2019 Global Mobile Broadband Forum (GMBBF), and largely covers the progress of utilizing 5G and Artificial Intelligence (AI) in industrial machine vision. ZTE and China Telecom are also deploying 5G with Haier, but on the consumer Internet of Things (IoT) side—ZTE will enable 5G IoT and Narrowband IoT (NB-IoT) connectivity for Haier AC products, connecting 100,000 sets of AC in a campus with multiple control methods (single point control, batch control on platform, and scheduled control).

ABI Research forecasts wireless connections to grow faster than fixed line connections in the factory between 2019 and 2030 in our Digital Factory Data (MD-IICT-105). While the majority (86%) of global factory connections were fixed line in 2019, it is forecast to fall to 14% by 2030. Much of this can be attributed to asset tracking use cases, which will be primarily driven by LPWA-LTE, set to grow at a Compound Annual Growth Rate (CAGR) of 93.8% between 2019 and 2030. By 2030, ABI Research forecasts that 5G will become the dominant cellular connectivity solution, with 344 million digital factory connections worldwide. Of these, China is forecasted to contribute to 26% of the industrial 5G connections, followed by the United States, which is forecasted to contribute 20%.

Haier’s initial 5G MEC deployments are already producing benefits such as reduced costs and increases in operational efficiency. For example, the default deployment period of Haier factory industrial computers used to take between two and three months. With the 5G MEC-based machine vision solution, this deployment time has been reduced to less than a week, and deployment cost reduced by more than 20%. 5G is vital for such this use case for a few reasons:

1. Increase in Real Estate Capacity: According to a survey conducted by ABI Research, respondents (n=602) chose “Increasing Capacity” as the third most important key driver for purchasing new industrial systems. The 5G MEC solution was able to replace the IPC box, which initially housed Graphics Processing Units (GPUs) for the recording of videos to check for product quality on the assembly line. This created a few meters of space savings in the factory, increasing capacity.
2. Replace Cabling Costs and Associated Manhours: Cable drops in a factory average around US$200 to US$700, which can become very expensive for rotating machinery, where cables must be changed every two to three months. In the past, Haier’s machine vision inspection process used to depend on an operator manually downloading new AI models into the IPC box using a USB, but now, with 5G MEC, the AI software is directly downloaded into the 5G MEC through wireless connectivity.
3. High Bandwidth Downloads: Data download for electronic products—such as cell phones, Electronic Control Units (ECU) for automotive, Baseband Units (BBUs), and Remote Radio Units (RRUs)— are usually in the 20 Gb to 100 Gb range, and are done manually, with an operator moving the product off the product line to download and connect the fiber. With the larger bandwidths and faster download speeds promised by 5G, factories can meet the future demand for increasing data downloads and increasing production speed.

There are gains to be made for manufacturers that hope to undergo digital transformation, but each business case needs to be quantified and executed within budget constraints. Manufacturers operate on a thin margin, and large investments for pilot projects may not always be a viable solution. Drivers for digital transformation are quite similar across verticals but differ slightly whether it is Operational Technology (OT)-based or Information Technology (IT)-based. A survey conducted by ABI Research found that an IT-based role in a manufacturing plant is more likely to prioritize reducing downtime than an OT-based role, whereas the priority for an OT-based role is to replace and update aging infrastructure. Usually, it is an OT concern to create a business case to upgrade older industrial systems, however, it is usually the IT role to decide how best to ensure that upgrades can be made to reduce downtime, whether or not they should be wireless connections, and, if they are, which wireless technology should be used.

However, the rise of 5G MEC, private LTE/5G networks, and public cloud deployments can help alleviate this issue. With a cloud or edge deployment, manufacturers can free up hardware space and manhours and control digital transformation cost of investment. An interviewee from a Fortune 500 manufacturer mentioned that such an endeavor saved executives up to 800 hours annually, in addition to allowing only certain machines to be tested with digital transformation initiatives, rather than having a whole factory rollout. Returns on Investments (ROI) for initial deployments can generate cost savings and increase production efficiency and capacity, which can be used to invest further into other digital transformation initiatives. ABI Research already sees this trend of micro-dosages of Industrial 4.0 initiatives happening much more often on the factory floor, as explained earlier in the Haier factory case study.

Ultimately, the digital transformation process is a constant journey for a manufacturer. As demands increase (such the increase in data download requirements for ECU in automotive, the speed and size of data uploads to test self-driving cars, and the utilization of AI for machine vision inspection to reduce product recalls), so will the technological savviness of the factory. Needless to say, one of the core foundations of the Industry 4.0 factory is connectivity—while most factory floors are currently wired, there is a transition toward wireless factories taking place. More companies are now adopting private cellular solutions to enable their Industry 4.0 solutions. According to Nokia, private LTE would be able to enable 85% of Industry 4.0 use cases. The utilization of private cellular solutions would be able to bypass the security concerns that Wi-Fi commonly has, such as being able to be hacked by jammers, and guarantee mission-critical performance through Service Level Agreements (SLAs). A private cellular solution would also be able to provide latencies of below 20ms, which are essential for wireless use cases such as Autonomous Mobile Robots (AMRs) and wireless emergency stops. Private LTE solutions are a viable solution for manufacturers seeking to upgrade, as each access point offers a coverage worth approximately five Wi-Fi access points, while giving the factory floor the security and coverage required. With 5G on the rise and displaying promising returns for early adopters, private LTE is a sound deployment for manufacturers to enrich and further enable their digital transformation efforts.