Just when everyone was worried about China bringing down tech stocks, the country may be kicking off a boom that will fuel growth in the sector: 5G Networking.
China Mobile (CHL), China Unicom (CHU) and China Telecom introduced super-fast wireless services late last week. The new plans will be available in about 50 cities, including Beijing, Shanghai, Guangzhou and Shenzhen.
The launch came earlier than the original 2020 time frame. It marks the beginning of a 3-5 year technological upgrade that will make all kinds of futuristic applications possible: AI, self-driving vehicles and mobile videogaming on a level barely imagined yet. A massive “Internet of things” could be around the corner.
5G also represents a $2 trillion investment cycle. That could drive growth at scores of technology companies over dozens of quarters. Some potential beneficiaries are already popping up.
Chip maker Marvell Technology (MRVL) had its sharpest spike in almost a year on Monday after Wells Fargo cited “robust” demand for 5G base stations. The analyst sees that juicing business with existing clients like Samsung, prompting both an upgrade and a higher price target.
Qorvo Flies on Earnings
Last week, another semiconductor stock had its biggest gain in four years thanks to 5G: Qorvo (QRVO), which makes radio-frequency chips.
“Qorvo is securing significant content in 5G smartphones,” CEO Robert Bruggenworth said on the conference call. “We’re enjoying significant traction with our four largest customers in China, designing our low, mid-high and ultrahigh band solutions into their upcoming 5G smartphones.”
Other big names associated with 5G networking include:
- Qualcomm (QCOM), one of the top chip companies for mobile communications, reports earnings this afternoon.
- CommScope (COMM), a small provider of networking equipment, releases numbers in the premarket tomorrow.
- Skyworks Solutions (SWKS), which makes tiny antennas and transponders, issues results next Tuesday, November 12.
- Keysight Technology (KEYS), a provider of testing systems, reports earnings on November 26. KEYS was added to the S&P 500 exactly one year ago and has been the index’s third-best performer over that time.
- Taiwan Semiconductor (TSM): The contract chip maker keeps flying after beating estimates across the board last month.
China Tensions Calming?
China’s earlier-than-expected 5G rollout wasn’t the only positive headline recently. On Sunday, Commerce Secretary Ross said the U.S. will soon let domestic companies sell technology to Huawei. The Chinese tech giant is one of the top makers of 5G systems.
The next day, almost on queue, Huawei Chairman Guo Ping addressed the Web Summit conference in Lisbon. “This is a huge market,” he said, promising that firms helping to supply his company will be “the biggest winners.” This post includes some of those names.
In conclusion, the 5G boom has glimmered in the distance for most of the last year. And now it’s starting to become reality.
