With the 5G rollout already underway and expected to launch sometime next year, we should be expecting a lot of chatter around the next generation in mobile online connectivity in 2019, starting with the Mobile World Congress (MWC) being held this week in Barcelona.
At this global event, telecom equipment providers such as Huawei, Ericsson (NASDAQ:ERIC), and Nokia (NYSE:NOK) will be showing off their brand-new 5G gear, while global operators are going to be talking up their progress for getting their 5G networks online and running. Ahead of MWC, Samsung (OTC:SSNLF) has also released the first 5G version of the Galaxy S10 phone, which it will make available later this year.
With 5G wireless connectivity promising to offer connections that are many multiples faster than current 4G connections, Internet of Things (IoT) technologies can reach their full potential, since IoT devices will finally be able to send and receive large amounts of data (around one Gigabit) every second. That said, certain technology companies may benefit immediately from this increased talk about 5G more than others.
Samsung will likely see the most upside here. Besides being a 5G network equipment maker, Samsung has a leading role in IoT, with a full ecosystem in smart homes, smart cities, and industry IoT, not to mention its 5G smartphones. Speaking of Samsung’s phones, Qualcomm (NASDAQ:QCOM), the world’s largest mobile chipmaker, has cornered over 40% of the smartphone market and continues to be the leading choice for the flagship phones of Android OEMs. The company is now ahead of the pack in designing 5G chips—the recently announced Snapdragon X55 5G modem should be available near the end of the year, and will likely be installed in a vast majority of the first 5G devices to be launched in 2020.
One company that may not benefit much is Huawei, with the Trump administration making it clear in recent days that it wants the US to beat China in commercializing 5G services, and is strong-arming countries to not buy 5G equipment from China’s networking gear manufacturer Huawei. This would mean telecom equipment makers such as Cisco Systems (NASDAQ:CSCO), Nokia, and Ericsson stand to gain from this unfolding cold war in tech.
Another noteworthy 5G candidate is Skyworks Solutions Inc. (NASDAQ:SWKS), which is currently rolling out a suite of 5G products and services that are aimed at companies upgrading their 5G infrastructures such as telecom carriers and smartphone OEMs. These include small-cell and massive MIMO solutions for 5G base stations and 5G antenna tuning solutions for smartphones.
After this first tier, the next wave of 5G beneficiaries will likely be software and cloud providers such as Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), China’s Alibaba (NYSE:BABA) and Alphabet’s Google (NASDAQ:GOOGL).
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Beyond that, the number of SaaS offerings and cloud-based platforms that could potentially see a boost is vast. That’s because cloud-based products and services that depend on transferring vast amounts of data over low-latency connections will see significant improvements in their feasibility and operations. These include (but certainly are not limited to) fully autonomous vehicles; commercial drones used to monitor and scan farms and other equipment; virtual reality or augmented reality applications for medicine and other fields; IoT connected manufacturing, mining and energy assets that can continually be optimized through AI analytics and machine learning; and video streaming services.
So unlike 4G, the industries that 5G can affect or potentially disrupt in the next decade should be significant, because it can supercharge other technologies such as IoT, AI, augmented reality and robotics. As talk about 5G’s benefits reaches a crescendo in the next few years, investors will have to look carefully to determine if their industry can ride that wave or get wiped out in its wake.
Featured image: DepositPhotos © jamesteohart
