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US chip ban hikes cost of China 5G

China's top telecom infrastructure contractor is upset about higher power costs of 5G stations run on homemade chips

China Tower’s Jiangsu subsidiary reportedly complained to the provincial government when it drafted its own policies to accelerate 5G deployment into suburban and rural areas, where the hefty capital outlays required to meet the targets will less clearly generate the returns needed to recoup the investments.

Those returns will also reportedly be eroded by higher power costs. China Tower’s President Tong Jilu told reporters on the sidelines of a parliamentary session that his company may have to pay 100 billion yuan ($15.3 billion) per year just for electricity as 5G stations that use domestic equipment from Huawei and other local suppliers have become power guzzlers due to recently imposed US restrictions on their chip supplies.

Instead, the 5G stations are using less efficient homemade chips that are adding substantially to their power usage.

Tong explained that the average power consumption of one 5G station was 3.8 kilowatt per hour, or three times more than used by current 4G stations outfitted with more efficient chips.

He said the company’s aggregate annual power cost may hit 100 billion yuan once 5G deployment matched the size of existing 4G networks.

Ding Yun, Huawei’s telecoms business arm director, was quoted in local reports as saying that because of the US chip ban, Huawei is mulling sharing some of the additional electricity costs that telecom carriers rack up after switching to less efficient homemade chips in 5G base station systems. China Tower is one of Huawei’s pillar corporate clients.

Under Beijing’s 5G imperative, outlined in the recently promulgated Five Year Plan, China Tower and its partner carriers are now paying huge sums to roll out more coverage.

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