Analyst: These chip companies are the biggest winners in the 5G era

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Cellular network 5G communication technology has recently become the most discussed topic in the market, and many companies developing 5G products have begun to attract attention. Because even though 4G LTE has developed rapidly in the past few years, 5G has rapidly soared in the highest bandwidth speed, coupled with the characteristics of low latency, making many applications that were not possible in the past, such as high-resolution audio and video transmission, available after the commercialization of 5G networks in the future, which has deepened the high hopes that companies have for 5G. Therefore, everyone is optimistic about companies that have the opportunity to lead the 5G market in the future.

According to a report by the foreign financial website MotleyFool, although 5G-related technologies are still under testing at this stage, facing the potential business opportunities in the future, which companies will stand out? In this regard, some analysts pointed out that in the field of 5G chips, Qualcomm, Broadcom and Intel will have the opportunity to become the big winners in the 5G era. The analysts' analysis of why these three companies can benefit from the 5G era is as follows:

Qualcomm, the current giant in mobile communication chips, still mainly makes profits in two ways in the 5G era. One is to sell chips, mainly to provide mobile processors to smartphone manufacturers to make profits. The other way is to license patent technology to related equipment manufacturers. The huge patent licensing fees also make the company profitable.

It is worth noting that at Qualcomm's earnings conference a few days ago, CEO Steve Mollenkopf emphasized the importance of 5G development and said that the future market will be ruthless to those companies and competitors who start late in the transformation process. He further added that Qualcomm's focus and investment in the 5G field in the past few years has enabled Qualcomm to successfully establish a strong technological position and lead the 5G industry transformation, which will also enable Qualcomm to obtain huge revenue and profit growth opportunities at the end of fiscal year 2019.

After interpreting Steve Mollenkopf's remarks, the market said that it was obvious that Steve Mollenkopf wanted investors to pay close attention to the 5G transformation in the next few years, and under this, Qualcomm's chip business and patent licensing business will be able to develop.

As for Broadcom, a communications chip maker with different business practices from Qualcomm, it did not sell mobile processors in the past, or even independent cellular data devices. However, Broadcom sells a variety of communications chips, including wireless chips in the fields of Wi-Fi, Bluetooth, and cellular networks, which are crucial to the wireless functions of smartphones. Therefore, like Qualcomm, Broadcom will also benefit from the transformation and development of 5G communications technology in the future.

In fact, Broadcom CEO Hock Tan also pointed out at its earnings conference on September 6, 2018 that the industry's shift to 5G will drive its key customers, including Apple, which accounts for more than 60% of Broadcom's total wireless business revenue, and other companies to continue to purchase more advanced communication chips. These advanced technology chips are often more expensive, which in turn enables Broadcom to obtain higher profits from each iPhone.

In addition, analysts pointed out that the market's transition to the 5G field is unlikely to be completed all at once and will develop over time. As long as Apple continues to provide increasingly powerful cellular network subsystems for the iPhone with 5G technology, Broadcom's wireless business is expected to continue to benefit.

Compared with Qualcomm and Broadcom's entry into the 5G market from the basic telecommunications field, processor giant Intel has positioned itself in the 5G market as providing "end-to-end" solutions. It is understood that Apple's iPhone, which has already adopted Intel's baseband chips, is expected to adopt Intel's first 5G baseband chip, XMM 8160, on the 2020 iPhone. In addition, Intel will also provide chips for most of the wireless infrastructure of the 5G network. This part has already been seen at this year's CES, the upcoming Snow Ridge chip developed specifically for 5G wireless access and edge computing.

In addition, in his speech at this year's CES, Navin Shenoy, head of Intel's data center business, also said that the company's goal is to increase its market share in the cellular network base station chip market to more than 40% by 2020. According to the financial report released on October 25, 2018, Intel's data center division's revenue from communication service providers in the third quarter increased by 30% over the same period of the previous year. Currently, the data center division is Intel's second largest division and the key to its long-term growth strategy.

Therefore, although Intel's CFO and interim CEO Bob Swan said that the profitability of 5G baseband chips launched for terminal devices will be stronger than current 4G products, the company will benefit greatly from its 5G infrastructure.

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