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5G technology is the latest iteration of wireless communications technology and we believe it will present significant opportunities for investors. Like 4G and 3G before it, 5G is a wireless connection built to keep up with the proliferation of devices that need a mobile internet connection. But unlike its predecessors, 5G is a technological paradigm shift, akin to the shift from the typewriter to computer.

Why is 5G technology so important?

5G is more complex than any connectivity technology that came before it – delivering unparalleled levels of scalability and capability. 5G will be up to ten times faster than the current 4G standard we use today – so you’ll be able to download that 3D movie in 30 seconds!

5G is an absolute necessity to enable new technologies to operate efficiently such as the widespread use of autonomous self-driving cars, virtual reality, smart cities, more sophisticated industrial automation, and the ubiquitous connectivity of the heralded “Internet of Things”.  It is estimated that by 2020, 25 billion Internet of Thing devices will come online as well as more than 300,000 level three and four autonomous vehicles on the road which will need to transmit significantly more data and do so reliably.

5G networks will also support wearable gadgets such as health-tracking devices that depend on constant monitoring, and enable instant sharing of x-rays and other medical data. Networks will be able to support a multitude of sensors to control traffic, public transport, and other public services.

A diagram showing the difference in speed from 3G to 4G to 5G

Source: Blue Wireless

5G connection density

The incoming 5G standard must also support up to 1 million connected devices per square kilometre. This may sound like a lot but in super dense cities, when every traffic light, parking space, and vehicle is 5G-enabled, the connection density will be at capacity.

How is 5G technology different from its predecessors

Current networks use low-and medium-band spectrum, with wavelengths in the range of up to half a metre. Low-band radio waves can travel long distances and penetrate buildings, but can't carry as much data as high-frequency waves. 5G networks will also use millimetre-wave spectrum –  wavelengths so small they are measured in millimetres. These radio waves can carry huge amounts of data but don’t travel far, which means network builders need to place many small cells close together to use this spectrum.

The impact 5G technology will have on the global economy

Like prior generations of mobile technologies, 5G will have a profound effect on how people live, work, and interact, but 5G will transcend the communications field and help fundamentally alter how industries operate. It will allow a world where not just people are connected, but things such as: cars to the roads they drive on; doctors to the personal medical devices of their patients; and augmented reality for shopping and learning experiences.

A recent study "The 5G Economy: How 5G technology will contribute to the global economy" by Dr. David Teece –  a leading authority on technological change at the University of California Berkeley, and market researcher, IHS Markit, forecasts 5G mobile technology will create 22 million jobs and have a $US12.3 trillion impact on goods and services by 2035.

Why is 5G technology an attractive investment?

Macrovue believes 5G is one of the most exciting themes to have come along in some time.

5G has a huge addressable market

5G will impact every industry such as healthcare, manufacturing, distribution, automotive, retail, transportation, and emergency services, allowing industries to take advantage of connectivity in ways that wouldn’t have been possible before.

It will have an enormous impact on the global economy

5G technology will create 22 million jobs and have a $US12.3trillion impact on goods and services by 2035.

Regulation is supportive

The U.S Republican tax bill should lead to faster 5G adoption. By allowing deductions on spending to be immediate, it will enable telecoms to appropriately invest in 5G innovation. The proposed lower tax rate for the industry will also increase their profitability.

The industry players are numerous

5G is being implemented globally – Korea, Japan, China and the U.S all plan to launch 5G before 2020. In the U.S, Verizon and AT&T are expected to roll out 5G technology as early as this year.

Early winners for the emerging 5G ecosystem

Without getting too technical, 5G deployments will involve using established 4G networks but will add multiple high-volume cell sites for mobile broadband that will serve a rising number of connected devices. From an investment standpoint, the first beneficiaries of this trend will likely be the telecommunications infrastructure providers as well as the specialised semiconductor manufacturers that will enable the growing number of devices connected to wireless networks to communicate with one another. Other natural beneficiaries will be the tower companies, contractors, and carriers that can successfully expand their addressable market for revenue. Certainly, as with any new technology that enhances capabilities and spurs further competition, the consumer is likely to be the most direct beneficiary of 5G services.

A diagram showing how 5G will influence the future

Source: Infineon Technologies

5G technology is being implemented globally

Time frames are as follows:

  • Korea soft launch planned in 2018, commercial launch 2019-20.
  • Japan commercial launch in 2020.
  • US commercial launches planned in 2018-20.
  • China trials to start in 2018, commercial launch planned in 2020.
  • EU selective commercial launched in 2020, coverage of the main urban areas and transport routes targeted for 2025.

Investing early in 5G Technology

Our investment team has researched and analysed the companies best positioned to benefit from the 5G rollout and have identified ten dominant stocks including Qualcomm, Ericsson and Corning. 

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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