5G Core Market by Component (Software and Services), Deployment (On-premise and Cloud), Network Function (Access & Mobility Management Function, Session Management Function, Policy Control Function, Network Exposure Function, NF Repository Function, Unified Data Management, Authentication Server Function, User Plane Function, Application Function, and Network Slice Selection Function), Architecture(Service-based Architecture and Cloud Native Architecture), End-user(Telecom Operators and Enterprises), and Region (North America, Europe, Asia-Pacific, and LAMEA): Opportunity Analysis and Industry Forecast, 2023-2032

5G Core Overview

The 5G Core, also known as 5G Standalone (SA) Core, is the central intelligence of the fifth generation (5G) mobile network architecture. It represents a significant advancement over previous generations like 4G LTE. The 5G Core is designed to meet the diverse requirements of 5G networks, delivering enhanced performance, reliability, and efficiency. It enables the creation of multiple virtual networks through network slicing, allowing tailored optimization for different applications. With a service-based architecture, the 5G Core offers flexibility, scalability, and interoperability, supporting dynamic service deployment and integration of third-party applications. The separation of control and user planes enhances network efficiency and reduces latency. The 5G Core comprises various network functions such as AMF, SMF, UPF, PCF, AUSF, and more, working together to ensure seamless network operation. Leveraging cloud and virtualization technologies, the 5G Core enables flexible deployment and resource optimization, further enhancing scalability and efficiency.

Global 5G Core Market Analysis

The global 5G core market size was $2.77 billion in 2022 and is predicted to grow with a CAGR of 25.2%, by generating a revenue of $22.28 billion by 2032.

COVID-19 Impact on Global 5G Core Market

The COVID-19 pandemic had mixed impact on the 5G core market. On the one hand, the deployment of 5G networks experienced delays due to disruptions in supply chains, manufacturing, and construction. Many countries postponed their rollout plans, impacting the demand for 5G core equipment and solutions. On the other hand, the pandemic highlighted the importance of reliable connectivity as remote work, online education, telemedicine, and digital entertainment surged. This increased demand created opportunities for the 5G core market to provide the necessary network capacity and advanced services. The pandemic also accelerated digital transformation efforts across industries, driving the need for 5G core solutions to support technologies like cloud computing, edge computing, and IoT. Additionally, the healthcare sector witnessed an increased focus on 5G for telehealth and remote patient monitoring. Despite challenges, significant investments continued to flow into the 5G core market, fostering innovation and technological advancements.

While the pandemic caused initial disruptions, it also accelerated the demand for 5G connectivity and digitalization, presenting opportunities for the 5G core market to support these needs and contribute to economic recovery.

Increasing Mobile Data Traffic to Drive the Market Growth

The growth and development of the 5G Core market are driven by several key factors. The increasing demand for high-speed data services and the exponential growth of connected devices led to a significant rise in mobile data traffic. 5G Core networks offer enhanced data processing capabilities and low-latency connectivity, making them essential for efficiently handling the growing data volume. Secondly, the advancements in network technology provided by 5G Core networks, including improved speed, capacity, reliability, and latency, attract consumers and businesses, fostering the adoption of 5G services. Additionally, the expansion of IoT applications across industries relies on robust and scalable connectivity solutions offered by 5G Core networks. As a result, the demand for 5G Core solutions increases as IoT grows. Furthermore, the ongoing digitalization and automation efforts in various sectors, such as manufacturing and logistics, drive the demand for 5G Core networks.

High Infrastructure Costs to Restrain the Market Growth  

The 5G core market faces several factors that can restrain its growth. One of the biggest challenges is the high infrastructure costs of deploying 5G networks. Building and maintaining the necessary hardware, software, and network upgrades require noteworthy investment, which can slow down adoption. Additionally, regulatory challenges pose a restraint, as different countries have varying regulations and standards for spectrum allocation, data privacy, and security. More coverage and interoperability are needed for the 5G core market, especially in rural areas, while the initial scarcity of compatible devices and infrastructure creates integration difficulties. Security concerns are another factor, as the higher connectivity and increased number of connected devices in 5G networks can make cyberattacks vulnerable. Moreover, the need to upgrade existing infrastructure and legacy systems involves complexities and costs. Finally, the readiness of the ecosystem, including applications, services, and solutions leveraging 5G capabilities, is crucial for driving adoption.

Rising Adoption of Internet of Things (IoT) to Drive Excellent Opportunities

The 5G Core market is likely to experience numerous opportunities for stakeholders across various industries. One key opportunity is IOT. The extensive connectivity of 5G facilitates the growth of the Internet of Things (IoT), allowing companies in sectors such as smart cities, healthcare, and industrial automation to leverage 5G for applications like smart sensors, remote monitoring, and autonomous vehicles. Additionally, the ultra-low latency and high reliability of 5G Core open doors for mission-critical services, such as remote surgery and public safety applications, creating opportunities in healthcare, public safety, transportation, and logistics. Network slicing, a feature of 5G Core, allows network resources to be allocated for specific use cases or industries, enabling customized services and revenue opportunities for network operators. Furthermore, the integration of edge computing with 5G Core enables real-time data processing and analysis, providing opportunities for edge computing service providers, cloud providers, and application developers. The enterprise sector can leverage 5G Core to drive digital transformation, utilizing augmented reality and artificial intelligence. Moreover, deploying 5G networks requires significant infrastructure upgrades, offering opportunities for equipment vendors, infrastructure providers, and construction companies.

Global 5G Core Market Share, by Component, 2022

The software sub-segment accounted for the highest market share in 2022. The software has emerged as a dominant force in the 5G core market due to its significant contributions. Through virtualization and Software-Defined Networking (SDN), software-based virtualized network functions (VNFs) have replaced traditional hardware, enabling improved scalability, faster deployment, and cost optimization. Network Function Virtualization (NFV) further enhances this by decoupling network functions from dedicated hardware appliances, creating a more efficient and adaptable infrastructure. 

Global 5G Core Market Share, by Deployment, 2022

The cloud sub-segment accounted for the highest market share in 2022. The dominance of the cloud in the 5G core market can be attributed to several key factors. Firstly, cloud technologies have facilitated the virtualization of network functions, allowing the 5G core network to operate in a cloud environment. This virtualization, coupled with Network Functions Virtualization (NFV), has brought flexibility and cost efficiency to deploying network functions. Additionally, the scalability and elasticity offered by the cloud have been crucial in handling the massive amounts of data traffic and the growing number of connected devices in the 5G era. Cloud infrastructure allows on-demand resource allocation, enabling the 5G core network to adapt to fluctuating traffic demands and ensuring optimal performance.

Global 5G Core Market Share, by Network Function, 2022

The user plane function sub-segment accounted for the highest market share in 2022. The User Plane Function (UPF) is a critical component of the 5G Core (5GC) network architecture, playing a significant role in enabling high-speed data transfer and low-latency communication. While it may not be accurate to say that the UPF has "dominated" the 5G Core market, it has gained prominence for several reasons. The UPF efficiently handles data traffic, performs traffic offloading, and optimizes network performance. It ensures low latency and high Quality of Service (quality of service), vital for real-time applications. Additionally, the UPF facilitates edge computing and network slicing, bringing processing capabilities closer to the edge and creating virtual network instances for specific applications or user groups. Its scalability and flexibility allow operators to adapt to changing network requirements and efficiently manage resources. While the UPF is crucial, the overall success of 5G networks depends on the collaboration of various components, including the Control Plane Function (CPF). Together, these components enable the full potential of 5G networks.

Global 5G Core Market Share, by Architecture, 2022

The service-based architecture sub-segment accounted for the highest market share in 2022. Service-based architecture (SBA) has emerged as the dominant architectural model in the 5G core market due to its numerous advantages. SBA offers flexibility and scalability, allowing network operators to dynamically deploy and remove services based on demand, optimizing resource utilization and costs. Its service-oriented approach enables easy integration with third-party applications and systems, fostering innovation and rapid service deployment. SBA promotes interoperability and standardization through clear interfaces and protocols, facilitating multi-vendor deployments and reducing vendor lock-in. Additionally, SBA is crucial in enabling network slicing, which partitions network resources for specific use cases. Embracing cloud-native principles, SBA leverages containerization, orchestration, and microservices, providing agility, scalability, and efficient resource utilization. It enables advanced service quality mechanisms, end-to-end orchestration, and policy-based management. SBA's future-proof design integrates with emerging technologies and allows for easy evolution and upgrades.

Global 5G Core Market Share, by End-user, 2022

The telecom operators sub-segment accounted for the highest market share in 2022. Telecom operators have dominated the 5G core market due to various factors. Firstly, they have substantially invested in upgrading their network infrastructure to support 5G technology, including deploying new RANs and improving backhaul and core networks. Additionally, their ownership of licenses and spectrum allocations gives them exclusive rights to operate in specific frequency bands, positioning them as key players in the 5G market. Telecom operators also possess extensive expertise and experience in managing and using telecommunications networks, which gives them a head start over new entrants. Furthermore, their existing customer base gives them a significant advantage in promoting and selling 5G services. Telecom operators have actively participated in ecosystem development, collaborating with stakeholders to shape the 5G industry. Their widespread network coverage and ability to differentiate services further solidify their dominance in the 5G core market.

Global 5G Core Market Share, by Region, 2022

The Asia-Pacific 5G core market generated the highest revenue in 2022. The Asia-Pacific region has risen as a prevailing force in the 5G core market due to its various important factors. Technological advancements in countries like South Korea, China, and Japan have played a critical role, as these countries have made significant investments in research and development, driving rapid progress and commercialization of 5G technologies. Governments in the region have provided strong support through favorable policies, regulatory frameworks, and funding initiatives to accelerate 5G deployment. The large population and urbanization in the region have created a substantial market size, driving the demand for high-speed internet, smart cities, and IoT devices, which further fuels the need for advanced 5G networks. The strong telecom industry and industry collaborations within the region have also contributed to its dominance in the 5G core market.

Competitive Scenario in the Global 5G Core Market

Investment and agreement are common strategies followed by major market players. One of the leading market players in the industry is Cisco Systems. In December 2022, Cisco Systems, Inc. and T-Mobile US, Inc. partnered to launch a cloud-based 5G main gateway. With this launch, the companies aim to take autonomous 5G core networks to the next level.

Some of the leading 5G core market players are Telefonaktiebolaget LM Ericsson, Nokia Corporation, Huawei Technologies Co., Ltd., Samsung Electronics Co., Ltd., Cisco Systems, Inc., Hewlett Packard Enterprise Company, Oracle Corporation, Athonet, Mavenir, and Affirmed Networks.