- Tariffs are unlikely to derail the entire open RAN movement, but will affect smaller vendors more profoundly
- If tariffs push operators toward more conservative investment approaches, that could mean open RAN suffers more than traditional RAN
- Smaller vendors are already having a tough time competing with larger rivals
President Trump’s tariffs could be a death sentence for smaller vendors trying to make it in open RAN. These small companies are already experiencing difficulties competing against larger rivals, and adding to their cost of business will make a challenging situation even more formidable.
The tariffs could very well be life or death for these smaller open RAN vendors, some of whom were declared dead or close to it a year ago. Airspan, for example, filed for bankruptcy protection last year and emerged leaner and meaner. More recently, Mavenir was grappling with financial uncertainties.
Fierce reached out to both privately held companies for comment. "We are currently working with our vendors to understand what the impacts of tariffs may be, and this is not limited to open RAN but across all our suppliers," Mavenir said in a statement provided to Fierce. Airspan declined to comment.
Tariff impact on smaller players
These are just two examples of open RAN players. Analysts point out that these companies comprise a very small percentage of the open RAN market. However, the chances of them and other small players gaining market share will decrease as tariffs take hold.
“I think the issue now is understanding that Q2 is going to suck if this continues on the tariff side for everybody, but it’s going to suck worse for the little guys because they typically can’t absorb the additional costs,” said Earl Lum, president of EJL Wireless Research. “They’re going to be in a heap of trouble.”
Lum, whose research work involves tearing down 5G equipment and examining all the parts inside, said the materials that are used to make radios, including those assembled in the U.S., come from outside the U.S.; hence, there’s virtually no way to avoid tariffs. That wasn’t always the case – there was a time when manufacturers in the wireless industry had operations in the U.S., but they moved them overseas for economic reasons (which seems ironic now).
“Everyone who makes electronic parts is in Southeast Asia, and every semiconductor company who packages their chips uses packaging companies in Southeast Asia," Lum told Fierce. "Everyone on the planet has to import a fully packaged semiconductor chip from Asia back into the U.S. to sell if it's being made with a box in the U.S.”
For sure, big vendors like Ericsson, Nokia and Samsung will feel the effects. Samsung’s radios are made in South Korea and Vietnam, which were hit with 25% and 45% tariffs, respectively, he noted. But small businesses in the U.S. that work in the wireless industry and open RAN specifically are going to be severely impacted, he said.
Mobile Experts chief analyst Joe Madden agreed that U.S.-imposed tariffs will increase costs for many components that come to the U.S. from other countries.
“Open RAN suppliers will have the same issue, as every supplier uses components sourced from Asia,” Madden said.
The tariffs will be a blow to the global open RAN initiative, especially Fujitsu, Pennant Investors partner Tim McDonald said. The Japanese company provides 5G radios to EchoStar and AT&T and the tariff effectively adds a 24% premium to its products. overnight.
“If open RAN is a bet on a more open, secure, and competitive telecom future, these tariffs are a stress test,” McDonald wrote. “Can the coalition of democratic nations pushing for open RAN remain unified under the weight of economic nationalism? Will the U.S. telecom industry absorb the cost, pass it to consumers, or slow down deployment?”
Tariffs: Wake-up call for operators?
Open RAN evangelist John Baker, who is now consulting after departing Mavenir last year, said tariffs – in either direction – are not good for anyone. But he believes the tariff debate is good for open RAN.
His reasoning? “It should, hopefully, move some of these operators to look at other sources of supply, which they could do through open interfaces,” he said. “Just look at Dish. They can essentially control their prices by changing vendors.”
Indeed, although EchoStar/Dish is struggling to keep and add Boost Mobile customers, its claim to fame in wireless is building a nationwide 5G network using open RAN. One of the advertised benefits of open RAN is the ability to swiftly swap out equipment from one vendor in exchange for another if, for example, that other vendor offers a better price. EchoStar demonstrated that last year when it swapped out VMware for containers-as-a-service (CaaS) vendor Wind River.
Bigger RAN picture
Others aren’t overly concerned about tariffs’ impact on the open RAN movement. “While the increased supply chain uncertainty is not ideal, it is simply unlikely that the tariffs are enough to significantly derail the movement toward more openness, virtualization, automation and intelligence in the RAN,” Dell'Oro Group analyst Stefan Pongratz told Fierce.
Senza Fili President Monica Paolini also said she doesn’t see open RAN being specifically affected as a technology because the repercussions from tariffs will be felt throughout the telecom ecosystem.
However, tariffs may push operators toward more conservative approaches to investment to compensate for economic uncertainty, which may mean that open RAN suffers more than traditional RAN or the more up-and-coming AI-RAN.
Already, AI-RAN is getting more attention than open RAN in some circles.
At Mobile World Congress in Barcelona last month, “everybody was talking about AI-RAN or AI in the RAN, but few were talking about open RAN. Because of Nvidia’s role, the tariff implications on AI-RAN may be more complex and interesting. In the long term, tariffs will accelerate the emergence of competitors from other countries, which of course will not be good news for Nvidia,” she concluded.