Rakon (NZX: RAK) has identified significant opportunities for its technology in the growing markets for 5G network infrastructure and low earth orbit satellites (leosats).
Rakon manufactures crystal oscillators, a key component for these technologies, and says its products have been incorporated into the design of 5G infrastructure equipment by all major suppliers.
Chairman Bruce Irvine told the company’s AGM on 9 September that the upgrade of 4G networks to 5G networks represents a significant opportunity for Rakon.
“Our Mercury+, OCXOs [oven controlled crystal oscillators] and ultra-stable TCXOs [temperature compensated crystal oscillators] have been designed in to the 5G remote radioheads (RRH) and base stations. Rakon is designed in to the equipment of all tier one 5G providers.”
However he said the move to 5G also presented challenges for Rakon, from both a technology and market perspective.
“The rollout of 5G is our biggest challenge and biggest opportunity. We already have a good share of business awarded by tier one customers. The challenge lies in meeting the existing demand and continuing to bring new products to market that meet the higher specifications demanded by 5G applications…
“We are investing in new manufacturing processes to address market needs for smaller and leading edge oscillator performance.”
On the market situations, Irvine said the company faced many uncertainties: “We are ready to manufacture to [5G equipment manufacturers’] orders but sometimes the phasing of those orders does not come through as we expected.
“While our customers want our product… They must wait, and we in turn must wait, for orders from the network operators.”
He said demand for 5G compatible products was expected to continue for a number of years as spectrum is released, the technology is developed and new end uses are established.
“There will be an upgrade of existing 4G infrastructure to support an initial rollout of 5G. Then there will be deployment of new dedicated 5G infrastructure enabling much faster speeds of data transfer than possible with 4G, and much wider bandwidth, enabling mass connectivity, better reliability, latency and spectrum efficiency.”
Irvine said leosats represented an additional and emerging opportunity for the company’s oscillators, following receipt of its first order during FY19. However its existing market for oscillators within geostationary satellites was declining.
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“While overall Rakon’s revenue from the space sector grew in the 2019 financial year with the inclusion of the Rakon India domestic space market, Rakon’s European space business saw lower returns, as this market enters a transition phase between the new LEO satellite technology and the traditional geosynchronous orbit satellites.”