Though it's still early, 5G network rollouts and phone launches are steadily growing in number, setting the stage for broader adoption of the technology in 2020 and the following years.
Here's a look at companies (aside from mobile carriers and smartphone OEMs) that stand to receive a sales boost from 5G network deployments and/or phone sales. This shouldn't be seen as a list of stock recommendations, but rather an overview of firms with meaningful 5G exposure.
Nokia and Ericsson
As two of the largest players in a highly cyclical mobile infrastructure market whose sales have been pressured in recent years by the winding down of 4G buildouts, Nokia (NOK) - Get Report and Ericsson (ERIC) - Get Report will naturally benefit a lot as 5G buildouts accelerate. In addition, as many others have noted, the U.S. government's efforts to discourage friendly countries from using Huawei and ZTE's equipment in their 5G buildouts stand to increase Nokia and Ericsson's share of 5G contract wins.
Skyworks, Qorvo,Broadcom and NXP Semiconductors
Skyworks (SWKS) - Get Report , Qorvo (QRVO) - Get Report and Broadcom (AVGO) - Get Report have long been three of the largest suppliers of the RF front-end components needed by mobile phones to transmit and receive cellular signals. This is a market that stands to get a decent lift from 5G phone adoption, since a host of additional RF chips and modules are needed to support 5G networks across both conventional sub-6GHz wireless spectrum bands and high-frequency millimeter-wave (mmWave) bands.
Skyworks and Qorvo are also notable RF component suppliers for the 5G base station market, and Broadcom has been developing Ethernet switching chips for 5G networks. NXP Semiconductors (NXPI) - Get Report , meanwhile, is a major supplier of RF power amplifiers for mobile base stations.
It's hard to find a more vocal 5G supporter than Qualcomm (QCOM) - Get Report . The mobile chip giant currently has a dominant position in the 5G smartphone modem market, thanks to strong design win activity for its Snapdragon X50 and X55 modems. Qualcomm has also been reporting good design win activity for its 5G RF front-end offerings, and has argued for a while that 5G gives it an opportunity to gain RF share.
Also, to the extent that 5G phone sales boost a currently-sluggish smartphone market, they should be a boon for Qualcomm's patent-licensing business, which (subject to a price cap) collects royalties based on the price of a mobile device that uses its cellular patents.
As a top supplier of programmable chips (FPGAs) for mobile infrastructure equipment, Xilinx
is well-exposed to 5G network rollouts. The company's FPGAs are a common sight in both the
portion of mobile base stations and their radio units. During Xilinx's April 24th earnings call, CEO Victor Peng said his company has been seeing "more than our typical share of baseband revenue in this very early phase of 5G deployment," and that the complexity of 5G "drives the need for significantly more radios than in 4G."
Intel (INTC) - Get Report has several different avenues for profiting from 5G deployments. Along with Xilinx, Intel is one of the two main players in the FPGA market. The company's Xeon CPUs are widely used by telcos -- both within conventional data centers and at the network edge -- to power cloud services, and (courtesy of a concept known as network functions virtualization, or NFV) they're increasingly powering commodity servers that are taking over network functions from proprietary hardware.
Intel also recently unveiled Snow Ridge, a processor for 5G base stations that it says will ship during the second half of 2019. The company has set a goal of having its silicon inside of 40% of mobile base stations by 2022.
Marvell's (MRVL) - Get Report $6 billion 2018 acquisition of Cavium made it a top player in the base station processor market, via Cavium's OCTEON processor family. The company has also noted that whereas Cavium's processors have historically only been used in the baseband part of a base station, 5G is creating design win opportunities within radio units and also within fronthaul interface systems that connect radio heads with baseband units.
Texas Instruments and Analog Devices
Texas Instruments (TXN) - Get Report and Analog Devices (ADI) - Get Report are both major suppliers analog, mixed-signal and RF chips for mobile base stations, with TI also acting as a processor supplier. And both companies have argued that the complexity of 5G radios provide it with a major opportunity to grow their sales to the mobile infrastructure market. On its last earnings call, ADI claimed that its content opportunity on 5G systems using massive MIMO antenna arrays is up to four times larger than its opportunity in traditional 4G systems.
Cisco Systems and Juniper Networks
As the two biggest players in the carrier router market, Cisco Systems (CSCO) - Get Report and Juniper Networks (JNPR) - Get Report will benefit as 5G data traffic eventually drives larger investments in core carrier networks. Each company has also been trying hard to grow its software sales to telcos.
Crown Castle, American Tower and SBA Communications
5G rollouts stand to grow the number of cell sites that the average carrier winds up supporting, particularly in those cases when a carrier is making heavy use of
and/or deploying 5G in mmWave spectrum bands that have limited range. As three of the world's biggest cell site owners, Crown Castle
, American Tower
and SBA Communications
should each see a bit of a lift from this trend.
Save 57% with our July 4th Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor! Click here to sign up!