11th Feb 2022
The pandemic brought a spike in demand for reliable, fast internet both for industrial applications like smart factories, and for private use for remote work and study. Increased adoption encouraged telecommunications networks to deploy more 5G capacity, which in turn drove electronics companies to produce more 5G devices.
At the same time, governments stepped up to accelerate the 5G rollout, adding to the momentum and helping kick off a flywheel that’s likely to benefit 5G network stocks into 2022 and beyond.
Infrastructure projects steamed ahead
2021 saw an impressive number of new projects and partnerships which form the infrastructure for continuous and rapid adoption of 5G.
To give a few examples:
- 5G companies’ stock Ericsson announced partnerships with telecommunications companies that include Vodafone in Germany1; Virgin Media in the UK2; New Zealand provider 2degrees3; Entel, Chile’s largest telco company4; Emirati carrier Etisalat5; and Indonesian communications service provider Indosat Ooredoo6.
- 5G networks stock Nokia signed a new 5G network order to operate in Bulgaria, Serbia, and Slovenia7; completed a deal to modernize Union Wireless’ 4G/5G networks in the US8; and formed part of an optical network deployed across Australia9.
- Nvidia and Google Cloud announced plans to build the first AI-on-5G Innovation Lab, intended to help accelerate development of advanced 5G and AI applications.10
Although economic conditions and rising political tensions around Chinese 5G provider Huawei slowed down some projects11, it’s estimated that by the end of 2021, 79 countries will have either commercialized 5G networks, or run trials to do so.12
The Biden Infrastructure Plan was approved in November, allocating $65 billion to expanding broadband access and 5G connectivity13. Gartner analysts predict that tier-1 cities will have 60% 5G coverage by 202414, and Verizon reports that its 5G Ultra Wideband network is operational in 42 major cities in the US15.
In August, Gartner reported that 5G had grown to account for 39% of total wireless infrastructure revenues for communication service providers (CSPs), and predicted that it would rise further to $19.1 billion in 2021, up from $13.7 billion in 202016, while a longer-range forecast expects the global 5G infrastructure market to reach $49.64 billion by 202817, testimony to the rapid acceleration of 5G infrastructure.
5G adoption skyrocketed
Deloitte reports that 58% of networking executives across all industries are deploying 5G or running pilots18, while according to the Manufacturing Institute, 56% of manufacturers intend to test or deploy 5G before the end of this year19. Among utilities companies, 26% are already using 5G, and another 36% intend to incorporate it in the near future20.
Much of this is due to increased adoption of Internet of Things (IoT) and Industrial IoT (IIoT) devices, which rely on 5G for lag-free data sharing and analytics. JP Morgan predicts that Japan and South Korea will hit 150 million IoT connections, and China will reach 2.5 billion, by 2025.21
5G smartphones saw an uptick in sales
5G smartphone adoption has been impressive too. Ericsson reports that more than 400 5G smartphone models launched this year22, while JP Morgan says that 725 million 5G phones will be sold in 2021, making this “the biggest year in terms of growth,” and expects to see a steeper ramp in volume next year23.
It’s estimated that 5G mobile subscriptions will reach 4.1 billion, or 37.1% of total global mobile subscriptions, by the end of 202624.
5G use cases continue to expand
Part of the speed of 5G adoption is due to its massive range of use cases, including smart grids; digital twins in industry and utilities management; cybersecurity; IoT, IIoT, and medical monitoring devices; edge computing; advanced artificial intelligence (AI) and machine learning (ML); autonomous vehicles; smart agriculture; connected cities; and more. 5G also has more sinister applications, with China using it for unmanned military vehicles (UAVs), drone missiles, and hypersonic weapons.
All in all, the global 5G fixed wireless access market is expected to grow from $538.9 million in 2020 to $1,092.26 million by the end of the year, at a CAGR of 102.7%.25
The metaverse added to 5G momentum
When the Facebook Group changed its name to Meta, it raised the profile of the metaverse. There’s much debate about whether this will be a positive or a negative development, but it’s clear that 5G is needed to make it happen.
Ericsson analysts observed that investment in extended reality (XR) use cases, which form part of the anticipated metaverse, will drive the need for 5G’s super low latency services26, and tech writer Reinhardt Krause said “Simply put, the metaverse will not exist without next-generation wireless connections.27“
The pandemic emphasized the need for 5G
COVID-19 heightened demand for 5G networks. Industrial verticals looked to 5G to support lag-free data sharing for smart factories, lights off manufacturing, and digital twins, so that plants could continue running with only a skeleton staff. EY reports that 52% of enterprises are more interested in 5G and IoT because of COVID-1928.
As millions shifted to work and study from home, fast, reliable internet became a basic need, driving political will to fund 5G networks and expedite connectivity in rural areas. Additionally, real time data collection proved vital for remote medical monitoring that kept millions of people out of hospital without endangering their health.
5G represents a big value add
2021 brought new calculations about the value that 5G can bring to the economy, especially in the wake of the financial destruction wrought by COVID-19. According to Qualcomm, 5G could create 22.8 million new jobs, generate $13.1 trillion dollars of global economic output, and bring $265 billion of global 5G CAPEX and R&D annually over the next 15 years29. PWC differs only in the details, estimating that 5G could drive a total economic uplift of at least $1.3 trillion in the US alone.30
Analysts at JP Morgan echo the theme, conservatively forecasting 5G’s global enterprise opportunity at over $700 billion, including $180 billion in North America and a 16% cost reduction for healthcare workers using 5G for remote patient monitoring31. McKinsey points out that using 5G networks to power advanced agritech solutions could add $500 billion onto global GDP by 2030, as well as increasing global food production32.
2021 set the ball rolling for 2022 and beyond
The combined impact of increased 5G adoption, advances in 5G infrastructure, and further realization of the immense value that 5G can bring to the global economy, all helped kick the 5G flywheel into motion and attract more investor attention to 5G stocks. Although we can expect the flywheel to spin faster throughout 2022, analysts have warned that it may take a number of years before we see the full value of 5G. Sascha Seagen, PCMag’s lead mobile analyst, points out that it took 2-3 years from the launch of 4G before the most impactful applications appeared, so we should expect a similar lag for 5G33. Despite Qualcomm’s high expectations, it expects 5G’s full economic impact to be felt only by 203534.
While you could reliably hope that 5G stock will keep rising, it can nonetheless be difficult for private investors who want to be part of the 5G revolution to identify the best 5G stocks to buy on their own. A 5G ETF like Defiance’s FIVG offers an opportunity to spread your investment in a number of top 5G stocks, alongside cheap 5G stocks that could rise in value, as a way to invest in 5G infrastructure, networks, and related applications.
1 “Vodafone strengthens European partnership with Ericsson through new 5G Core contracts” June 17, 2021 https://www.ericsson.com/en/news/2021/6/vodafone-strengthens-european-partnership-with-ericsson
2 “Virgin Media O2 selects Ericsson 5G Core to power Standalone network” July 26, 2021 https://www.ericsson.com/en/news/2021/7/ericsson-5g-core-selected-to-power-standalone-network-deployment
3“New Zealand’s 2degrees selects Ericsson as sole 5G RAN partner” April 14, 2021 https://www.ericsson.com/en/news/2021/4/2degrees-new-zealand-opts-for-ericsson-5g
4 “Ericsson signs a 5G and IoT agreement in Chile” July 5, 2021 https://developingtelecoms.com/telecom-technology/wireless-networks/11449-ericsson-signs-a-5g-and-iot-agreement-in-chile.html
5 “Etisalat and Ericsson partner to commercially deploy 5G high-band in the UAE” June 20, 2021 https://www.ericsson.com/en/news/5/2021/etisalat-and-ericsson-partner-to-commercially-deploy-5g-high-band-in-the-uae-
6 “Indosat Ooredoo launches Ericsson-powered 5G in Jakarta” August 27, 2021 https://www.ericsson.com/en/press-releases/2/2021/8/indosat-ooredoo-launches-ericsson-powered-5g-in-jakarta
7 “Nokia expands 5G radio and core contract with A1 Telekom Austria Group into new markets” August 23, 2021 https://www.nokia.com/about-us/news/releases/2021/08/23/nokia-expands-5g-radio-and-core-contract-with-a1-telekom-austria-group-into-new-markets/
8 “Nokia chosen to modernize Union Wireless’ Radio Access Network” August 25, 2021 https://www.nokia.com/about-us/news/releases/2021/08/25/nokia-chosen-to-modernize-union-wireless-radio-access-network/
9 “Nokia and Vocus launch 200G optical network in Australia” August 16, 2021 https://www.nokia.com/about-us/news/releases/2021/08/16/nokia-and-vocus-launch-200g-optical-network-in-australia/
10 “NVIDIA and Google Cloud to Create Industry’s First AI-on-5G Lab to Speed Development of AI Everywhere” June 28, 2021 https://nvidianews.nvidia.com/news/nvidia-and-google-cloud-to-create-industrys-first-ai-on-5g-lab-to-speed-development-of-ai-everywhere
11 “Telecoms trends to look out for in 2022: What should we expect?” November 30, 2021 https://www.carritech.com/news/telecoms-trends-to-look-out-for-in-2022-what-should-we-expect/
12 “The 5G market is about to take off: What to expect in 2022 and beyond?” December 2, 2021 https://www.helpnetsecurity.com/2021/12/02/5g-market-2022/
13 “Broadband Dominates Tech Funding In Biden Infrastructure Bill” November 8, 2021 https://www.nextgov.com/emerging-tech/2021/11/broadband-dominates-tech-funding-biden-infrastructure-bill/186705/
14 “Gartner Forecasts Worldwide 5G Network Infrastructure Revenue to Grow 39% in 2021” August 4, 2021 https://www.gartner.com/en/newsroom/press-releases/2021-08-04-gartner-forecasts-worldwide-5g-network-infrastrucutre-revenue-to-grow-39pc-in-2021
15 “Verizon 5G Business Internet: Now In 42 US Cities” July 15, 2021 https://www.crn.com/news/networking/verizon-5g-business-internet-now-in-42-us-cities
16 “Gartner Forecasts Worldwide 5G Network Infrastructure Revenue to Grow 39% in 2021” August 4, 2021 https://www.gartner.com/en/newsroom/press-releases/2021-08-04-gartner-forecasts-worldwide-5g-network-infrastrucutre-revenue-to-grow-39pc-in-2021
17 “5G Infrastructure Market size worth $ 49.64 Billion, Globally, by 2028 at 42.7% CAGR: Verified Market Research” September 29, 2021 https://www.prnewswire.com/news-releases/5g-infrastructure-market-size-worth–49-64-billion-globally-by-2028-at-42-7-cagr-verified-market-research-301387775.html
18 “2022 power and utilities industry outlook” December 2021 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-eri-power-utilities-outlook-2022.pdf
19 “How 5G is Transforming the Manufacturing Landscape” March 2021 https://www.themanufacturinginstitute.org/wp-content/uploads/2021/03/Manufacturing-Institute-5G-study.pdf
20 “2022 power and utilities industry outlook” December 2021https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-eri-power-utilities-outlook-2022.pdf
21 “The Future of 5G Adoption” May 24, 2021 https://www.jpmorgan.com/insights/research/future-of-5g-adoption
22 “5G device outlook” 2021 https://www.ericsson.com/en/reports-and-papers/mobility-report/dataforecasts/5g-device-outlook
23 “The Future of 5G Adoption” May 24, 2021 https://www.jpmorgan.com/insights/research/future-of-5g-adoption
24 “Global 5G Market Demand and Service Revenue Forecast Report 2021: There Will be 4.1 Billion 5G Mobile Subscriptions Worldwide At year-end 2026” October 13, 2021 https://www.globenewswire.com/news-release/2021/10/13/2313246/28124/en/Global-5G-Market-Demand-and-Service-Revenue-Forecast-Report-2021-There-Will-be-4-1-Billion-5G-Mobile-Subscriptions-Worldwide-At-year-end-2026.html
25 “Global 5G Fixed Wireless Access Market Report 2021: Market is Expected to Reach $23,108.05 Million in 2025 at a CAGR of 114.5% – Long-term Forecast to 2030 – ResearchAndMarkets.com” December 2, 2021 https://finance.yahoo.com/news/global-5g-fixed-wireless-access-133300013.html
26 “5G device outlook” 2021 https://www.ericsson.com/en/reports-and-papers/mobility-report/dataforecasts/5g-device-outlook
27 “5G Stocks To Buy And Watch: How The Metaverse Could Give 5G Wireless And 6G A Boost” November 16, 2021 https://www.investors.com/news/technology/5g-stocks-5g-wireless-stocks/
28 “How 5G providers can help industries to flourish” May 26, 2021 https://www.ey.com/en_uk/tmt/how-5g-providers-can-help-industries-to-flourish
29 “Everything you need to know about 5G” https://www.qualcomm.com/5g/what-is-5g
30 “The global economic impact of 5G” https://www.pwc.com/gx/en/tmt/5g/global-economic-impact-5g.pdf
31 “The Future of 5G Adoption” May 24, 2021 https://www.jpmorgan.com/insights/research/future-of-5g-adoption
32 “Agriculture’s connected future: How technology can yield new growth” October 9, 2020 https://www.mckinsey.com/industries/agriculture/our-insights/agricultures-connected-future-how-technology-can-yield-new-growth
33 “What Is 5G?” Sascha Segan, February 25, 2021 https://www.pcmag.com/news/what-is-5g
34 “Everything you need to know about 5G” https://www.qualcomm.com/5g/what-is-5g