A shot in the arm for the wireless testing industry

NTIA’s allocation of USD 140.5 million as the first funding round gives a powerful signal of the relevance of testing in 5G and next-gen wireless technology.

The first funding opportunity for the USD 1.5-billion Public Wireless Supply Chain Innovation Fund, which is part of the CHIPS and Science Act passed last year, and focuses on federal government’s efforts to promote a secure supply chain and open approaches to network infrastructure, has been officially kicked off by the US government. National Telecommunications and Information Administration (NTIA) is administering the fund.

127 applications requesting USD 1.39 billion to support testing and research and development activities related to open and interoperable wireless networks have been received.

This first round consists of up to USD 140.5 million. It focuses on expanding and improving testing and R&D that will demonstrate the viability of new approaches to wireless like open radio access networks (O-RAN) and remove barriers to adoption.

Specifically, the funding will go to support expansion of industry-accepted testing and evaluation, focusing on interoperability, performance, and security of open and interoperable, standards-based 5G RAN and developing or improving the testing of those networks and their component parts.

Later, funding opportunities will build upon the foundational work of this first NOFO, creating an ecosystem for wireless innovation, built by the US and its global allies.

“The overwhelming interest in this first round of funding shows the private sector is stepping up to meet that need. These are the important first steps in this critical project to help us drive competition, strengthen our supply chain, and provide our allies additional trusted, innovative choices,” said Alan Davidson, US Assistant Secretary of Commerce, US Department of Commerce.

Telecom networks are facing a slew of simultaneous changes that are increasing complexity, from the deployment of 5G and the addition of new, higher frequency spectrum bands to the cloudification of the network and the exploration of O-RAN. This has huge implications on how those networks are tested, assured, and optimized.

The emergence of ubiquitous cloud-based networks is one such huge change for the telcos. The shift to cloud-native and disaggregated networks brings a software-centric environment and such an agile environment means a high volume of changes to the network – and all of these changes have the possibility of affecting service reliability and service continuity in a negative way. Testing is essential to ensure that the network changes do not impact the end-customer experience.

To meet this requirement, tests are evolving. Cloudification of network test is taking place, so that testing benefits from the cloud in the same ways that the network itself does, through increased availability, scalability, and agility through centralizing the management of network testing.

At the same time, telcos are increasingly adopting DevOps practices with a focus on continuous integration, continuous delivery, and continuous testing (CI/CD/CT) to enable them to constantly improve existing services and launch new ones to remain competitively differentiated. Of course, each iteration or new service chain will need to be rigorously tested and validated before launch and in-service to ensure the upmost QoS.

Of course, this brings challenges. Ensuring high quality of service (QoS) and QoE requires pre-launch test and validation as well as in-service real-time, end-to-end monitoring of application performance visibility across multiple domains throughout the entire lifecycle of the service.

Service providers use two tried and tested service assurance approaches – passive monitoring and active assurance. Passive monitoring offers in-depth, post-event analysis of network behavior and performance, based on real traffic. Conversely, active assurance requires emulated/simulated test traffic to be injected into the network – either in live networks or in test labs using containerized or virtualized test agents – to validate SLAs before and after service activation and guarantee superior QoS.

Such a repetitive approach to producing and testing software in short cycles allows organizations to reliably improve and release software on a continuous basis, reducing the cost, time, and risk of delivering incremental software changes and launching new services. In turn, this requires the automated testing and validation of new software code at every stage of the software development lifecycle. The 5G mantra is simple – “Test early. Test often. Test everywhere. Automate.”

Leaders in the T&M sector continue to engage in M&A activity
Emerson Electric Co. has agreed to buy National Instruments Corp for USD 8.2 billion, capping a nearly year-long pursuit of the measurement equipment maker. Emerson estimated that the NI transaction will result in USD 165 million in cost synergies over five years.

The acquisition is expected to bolster Emerson’s efforts to reshape itself as a major global player in the automation industry. The deal will strengthen a key pillar of Emerson’s strategy to build out its capabilities in the high-growth area of testing and measurement and allow it to tap National Instruments’ software-connected automated systems as part of its profitability push. The acquisition is expected to close in the first half of Emerson’s fiscal 2024, or by March 2024.

March 2023, NI announced the acquisition of SET GmbH (SET), long-standing experts in aerospace and defense test system development and recent innovators in power semiconductor reliability test. Together, the companies will reduce time to market for critical, highly differentiated solutions and accelerate semiconductor-to-transportation supply-chain convergence with power electronic materials, such as silicon carbide (SiC) and gallium nitrite (GaN). By combining capabilities, NI and SET can offer more differentiated solutions to customers and grow together by leveraging NI’s global scale.

February 2023, Keysight acquired Cliosoft, thereby adding its line of hardware design data and intellectual property (IP) management software tools to its portfolio of electronic design automation (EDA) solutions. By bringing Cliosoft into its EDA business, Keysight boosts its intelligent automation software offerings with PDM as an essential component in building the foundation for more productive workflows. Keysight is extending Cliosoft’s capabilities to include test data in a fabric that provides customers with a much stronger link between design and test.

Manufacturers teamed up too. Spirent Communications and NI have teamed up on what they say is the first and only comprehensive test solution for the O-RAN radio unit (RU). A bevy of partners, including Spirent Communications and the 5G Open Innovation Lab, worked together to spotlight a new private network solution that is aimed at making easier to deploy enterprise private mobile networks and assure their performance.

The T&M vendors recently announced results. They indicate that in the field of information and communication, which is the main field of test and measurement business, 5G smartphone penetration is slow despite that operators in each country have already initiated 5G services. This is because a killer application has yet to emerge, as well as some of the technical challenges in 5G via mmWave.

Meanwhile, the completion of the Release 17 standardization is increasing the utilization of 5G. Research and development for 5G utilization in the automotive field has begun, as well as research and demonstration experiments for building 5G networks in private domains, such as private 5G. In IoT field, the demand for customer-premises equipment (CPE), which is laid in the last mile, is increasing. In response, demand for developing 5G wireless module and Wi-Fi 6E has emerged. Furthermore, research and development for the next-generation communication standard, 6G, has begun.

In 5G networks, the O-RAN Alliance has been working to open up wireless access networks so that operators can build wireless networks more flexibly. By applying the O-RAN standard specifications to base station equipment that was previously configured with the manufacturer’s proprietary interface, it has become easier to build multi-vendor radio access networks. As a result, operators around the world are introducing O-RAN.

Since the data traffic is expanding rapidly due to sophisticated cloud computing services and the progress of 5G services, the network infrastructure is under strain. To solve this issue, service providers that are pursuing higher-speed networks are concentrating on the promotion of 100Gbps services, and network equipment manufacturers are developing 400Gbps and 800Gbps network equipment. In addition, research and development of innovative optical and wireless network (IOWN) is underway.

Rising prices and interest rates, increased geopolitical risks, and a prolonged global semiconductor shortage can have an important impact on our business performance. Amid such environment, we work to improve profitability by passing on cost increases due to inflation and other factors to our prices. We take measures against parts procurement risk like semiconductor shortage, such as securing inventory in an organized way, creating structure like strong relationship with business partners in order to get information quickly. Furthermore, we attempt to change high risk parts to alternative items for minimizing the risk.

VIAVI Solutions
VIAVI reported results for its third fiscal quarter ended April 1, 2023. The third quarter of fiscal 2023 net revenue was USD 247.8 million. GAAP net loss was USD (15.4) million, or USD (0.07) per share. Non-GAAP net income was USD 18.0 million, or USD 0.08 per share. Second quarter of fiscal 2023 net revenue was USD 284.5 million. GAAP net income was USD 8.4 million or USD 0.04 per share. Non-GAAP net income was USD 31.5 million, or USD 0.14 per share. Third quarter of fiscal 2022 net revenue was USD 315.5 million. GAAP net income was USD 19.2 million, or USD 0.08 per share. Non-GAAP net income was USD 52.0 million, or USD 0.22 per share.

Highlights

• Americas, Asia-Pacific, and EMEA customers represented 40.5 percent, 30.5 percent, and 29.0 percent, respectively, of total net revenue for the quarter ended April 1, 2023.
• As of April 1, 2023, the company held USD 586.6 million in total cash, short-term restricted cash, and short-term investments.
• As of April 1, 2023, the company had USD 96.4 million aggregate principal amount of 1.0 percent senior convertible notes, USD 68.1 million aggregate principal amount of 1.75 percent senior convertible notes, USD 250 million aggregate principal amount of 1.625 percent senior convertible notes, and USD 400 million aggregate principal amount of 3.75 percent senior convertible notes, with a total net carrying value of USD 792.1 million.
• During the fiscal quarter ended April 1, 2023, the company generated USD 17.8 million of cash flows from operations.

For the fourth quarter of fiscal 2023 ending July 1, 2023, the company expects net revenue to be between USD 242 million and USD 262 million and non-GAAP earnings per share to be between USD 0.07 to USD 0.09.

Anritsu Corporation
Anritsu group’s operating results for the fiscal year ended March 31, 2023, were as follows:
Orders decreased 0.5 percent YoY to 110,107 million yen, and revenue increased 5.2 percent to 110,919 million yen. Operating profit decreased 28.8 percent to 11,746 million yen, profit before tax decreased 27.5 percent to 12,438 million yen. Profit decreased 27.9 percent to 9256 million yen, and profit attributable to owners of the parent decreased 27.5 percent to 9272 million yen.

The test and measurement segment group develops, manufactures, and sells measuring instruments and systems for a variety of communication applications, and service assurance. The group delivers them to service providers, network equipment manufacturers, and maintenance and installation companies. During the fiscal year ended March 31, 2023, the vendor captured the development and production-related demand for high-speed network transmission in data centers, as well as the demand for general purpose test instruments. However, due to slowdown of mobile market growth, soaring raw material prices, as well as increased fixed costs and sales promotion expenses caused by global inflation, rising labor costs, etc., both revenue and operating profit decreased YoY. Consequently, the segment revenue decreased 0.8 percent YoY to 72,753 million yen and operating profit decreased 28.5 percent to 10,874 million yen.”

Business Forecast. It is estimated that demand for development will continue not only for the spread of 5G services in Europe, but also for the use of 5G in other fields. We also estimate that demand will grow for the expansion of network infrastructure in data centers and other facilities. With the above outlook, Anritsu group aims to be a 5G/IoT industry leader. To establish a competitive advantage, we work to provide solutions in a timely manner that accurately meet 5G-related demand, development demand for utilizing 5G, and demand for faster network. Furthermore, we have identified the following four priority new growth areas – EV and battery measurement, local 5G, optical sensing, and medical and pharmaceuticals. The company will accelerate growth in each of these areas through external collaboration and M&A.

Keysight Technologies
Keysight Technologies, Inc. reported financial results for the second fiscal quarter ended April 30, 2023.

Highlights

• Revenue grew 3 percent to reach USD 1.39 billion, compared with USD 1.35 billion last year, or 5 percent on a core basis, which excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months.
• GAAP net income was USD 283 million, or USD 1.58 per share, compared with USD 258 million, or USD 1.41 per share, in the second quarter of 2022.
• Non-GAAP net income was USD 380 million, or USD 2.12 per share, compared with USD 334 million, or USD 1.83 per share in the second quarter of 2022.
• As of April 30, 2023, cash and cash equivalents totaled USD 2.50 billion.

By segment, Communications Solutions Group (CSG) reported a revenue of USD 937 million in the second quarter, down 3 percent over last year, reflecting a 7-percent decline in commercial communications, while aerospace, defense, and government increased 7 percent driven by radar, spectrum operations, space and satellite, and research in 5G and 6G technologies.

Keysight’s third fiscal quarter of 2023 revenue is expected to be in the range of USD 1.37 billion to USD 1.39 billion.

National Instruments Corporation
NI recently announced Q1 2023 revenue of USD 437 million, up 13 percent YoY, a record for a first quarter. For Q1 2023, the value of the company’s total orders was down 10 percent YoY, compared to a very strong Q1 2022.

GAAP net income for Q1 was USD 47 million, with diluted earnings per share (EPS) of USD 0.35, and non-GAAP net income was USD 83 million, with non-GAAP diluted EPS of USD 0.62.

For Q1, YoY orders in the Americas region were down 12 percent, in EMEA orders were flat, and in APAC orders were down 15 percent.

With supply chain constraints beginning to ease, the vendor continued reducing its delinquent backlog as planned to support revenue growth despite a challenging economic environment. This dynamic also supported its continued gross margin expansion. GAAP and non-GAAP EPS were in the upper half of our guidance range, driven primarily by operational execution, as well as a lower-than-expected tax rate.

The acquisition of NI by Emerson Electric Co. is still pending.

Spirent Communications plc.
In 2022, Spirent delivered another year of robust revenue growth and a material increase in earnings.

Order book was up 7 percent to USD 288.1 million, with 30 percent for delivery beyond the next 12 months, which is a record and adds to future revenue visibility. Revenue was up 5.5 percent, driven by renewed strength in high-speed Ethernet from market demand and new product launches, offsetting some customer timing impacts in lifecycle service assurance. Adjusted operating profit increased by 9 percent to USD 129.5 million, with adjusted operating margin improving to 21.3 percent, up from 20.6 percent in 2021.

Spirent has worked with Reliance Jio’s R&D team and its dedicated quality assurance labs for many years. In 2022, its balance sheet shows USD 1.6 million (as compared to nil in 2021) of earnings from its India subsidiary.

For RJio, Spirent provided a hybrid managed solution that delivers the customer’s detailed test requirements and can be rapidly delivered and scaled as required. The telco utilized Spirent’s test-as-a-service managed solution to deliver automated validation and security testing of its new 5G standalone core network and cloud infrastructure. Focused on 5G SA core, cloud infrastructure and security, the solution is further enabled by Spirent’s extensive automation, reinforcing the strong collaboration between the two companies.

German test and measurement company Rohde & Schwarz said that it ended its fiscal year with increased revenue and strong order intake.

Rohde & Schwarz
R&S is privately held, but the company nonetheless reports a few of its financial and operating highlights each year. For its fiscal 2021-22 year, the company said that revenues were up to 2.53 billion euros (about USD 2.5 billion), or about, compared to 2.28 billion (about USD 2.26 billion) in its previous fiscal year. The company said that each of its three divisions achieved double-digit growth, but converting orders to billable sales was impeded by the tight supply chain situation. Having vertically integrated plants in Germany, Czech Republic, Singapore, and Malaysia helped the company stay stable, however.

R&S saw strong demand for high-performance wireless testers, signal generators, spectrum analyzers, and oscilloscopes in the wireless communications and automotive technologies sectors, and its businesses providing security scanners, military communications systems, and air traffic control systems also were on a solid footing.

R&S closed out June 2022 with around 13,000 employees, holding steady from last year’s number.

Indian market dynamics
India is a hotbed for test and measurement equipment, given the major tech overhaul the country is going through in every sector, including start-ups or traditional industries. Led by changes and demand of emerging trends like green mobility, rapid urbanization that is ushering in demand for 5G-led telecom industry, coupled with government focus on smart transition to green energy, hi-tech manufacturing processes, health industry, communication tools and smart appliances, smart transportation, the testing and measurement market is expected to experience an unprecedented growth in India.

The Indian market for general-purpose electronic T&M instruments alone has touched USD 300 million by 2022, according to Frost & Sullivan. It is poised to experience a CAGR of 5.1 percent during the period 2023 to 2032. The valuation of the worldwide test and measurement equipment market is expected to touch USD 28 billion by 2023.

The enhanced adoption of electronic devices and the increased penetration of modular instrumentation in every appliance used today depend on precision test and measurement tools. As the growth of the segment is registered by key end-user segments like telecom, automotive, aerospace and defense, electronics design and in a demand-driven scenario, the market is expected to boost forward in the near future.

Smart homes and uber lifestyle today demand that the rooms will reach the right temperature, be it air-conditioning or heating, before the person actually gets to the door. A smartwatch or a smartphone can perfectly satisfy the requirement. But what the remote control needs is to be perfectly synchronized through 5G networks. These networks need good-quality, highly reliable T&M instruments to create, design, deploy, and maintain them. With wireless applications increasing in range, the need for precision engineering is more in demand. Millimeter (mm) wave is the newest buzzword in the telecom industry and it has created demand for a new type of T&M instrumentation.

The government’s push for BharatNet, Digital India, smart cities, information highways, e-governance, India Stack are a few key projects which require extensive use of T&M as the crucial enablers, for each of these are connectivity and precision data. Further demand is created by the steps taken for pan-India optical fiber cable installation and maintenance in the community antenna television (CATV) segment.

The government has mandated testing of many consumer goods, and a number of labs, the mandatory testing and certification of telecom equipment (MTCTE) labs, have been established under this program.

The drive for environmental sustainability and the carbon-neutral approach to value add will further drive the demand up for the test and measurement sector. The downside of such a huge demand is that the quality of products available in the market may not be up to the standard in remote areas. While the test and measurement market is expected to see an unprecedented, demand-led growth, it is important that there is enough awareness on quality products, regular maintenance, and the right fitment according to requirements.