15th Jul 2022
- Semiconductor companies enjoyed a global revenue growth of 25.1% in 2021
- AMD, Nvidia, and Qualcomm were among the frontrunners who led the pursuit of 5G innovation
- The performance of semiconductor firms has a direct influence on the 5G sector as a whole, including network providers and smartphone manufacturers
2021 was a year of substantial growth for semiconductor firms, with global semiconductor revenues rising by 25.1%. One significant driving factor behind this performance was the rapidly expanding 5G smartphone market, in which smartphone chip production increased from 250 million to 555 million over the past year.1
As leading semiconductor manufacturers such as AMD, Nvidia, and Qualcomm continue to make strides with their 5G developments, their actions have produced a ripple effect that has influenced the performance of 5G network stocks and others who rely on their technology. By reflecting on these companies’ most emphatic strategic decisions, one can better understand the effect that they have on the 5G industry as a whole.
AMD’s record-breaking deal
Computer processor developer AMD made history through its $50 billion purchase of Xilinx in February 2022. A chip industry record, the acquisition put this 5G stock on the radars of potential investors and market analysts alike.2 The price tag that accompanied Xilinx was not the only record, however.
As a leader in adaptive computing technology and programmable processors, Xilinx boasts an extensive range of products that will greatly expand AMD’s portfolio. In fact, AMD claims that this acquisition has provided the company with the industry’s strongest portfolio of adaptive computing products.3
This acquisition also greatly expands AMD’s research and development capabilities, adding 15,000 engineers to the company’s workforce.4 With its greater manufacturing capabilities and scalability, AMD expects to generate $300 million in cost savings thanks to this deal.5 These benefits may prove vital in the company’s battle to wrestle market share from close rivals such as Intel.
So far, the Xilinx acquisition appears to have put AMD on track to achieving its financial goals. In addition to providing AMD with a company record market share of 25.6%6, the acquisition has also pushed AMD’s market capitalization past close rival Intel for the first time ever.7
Nvidia’s 5G push
While determining the top 5G stocks to invest in is a challenging task, one strong performer in recent times is graphics processing unit (GPU) designer Nvidia. The company enjoyed much financial success in 2021, wrapping up the fiscal year with a record revenue of $26.91 billion, up 61 percent from the previous year.8
Nvidia’s gaming, data center and professional visualization business units all reached record revenue levels, however, this didn’t distract the company from advancing its efforts to become a leading 5G stock.
The GPU producer partnered with Google Cloud to create its AI(artificial intelligence)-on-5G Innovation Lab. This first-of-its-kind lab, which provides access to Google Cloud’s Anthos platform and Nvidia’s accelerated computing software development kit, has been designed to equip AI software developers and network infrastructure providers with the tools they need to develop, test, and roll out 5G and AI applications.9
At the same time as its AI-on-5G unveiling, Nvidia also announced that it would be providing customers with the option to use Arm-based CPUs in conjunction with its AI-on-5G platform. This move was performed in order to provide customers with more avenues with which to utilize Nvidia’s 5G technology.10
Software company Mavenir announced its intention to collaborate with Nvidia to bring further features to the AI-on-5G solution. MAVedge-AI, an intelligent video analytics solution, is expected to be available to customers in early 2022.11
This solution, which delivers insights from large volumes of data, is aimed at improving the efficiency, reliability, and security of AI applications supported by 5G networks.
The Qualcomm effect
Competing to become one of the best 5G stocks on the market is semiconductor manufacturer Qualcomm. In early 2021, the company unveiled its Snapdragon X65 5G Modem-RF System. Capable of downloading data at 10 Gbps, this 5G modem is compatible with a wide range of devices, including 5G smartphones, personal computers, and private 5G networks set up by enterprises.12
Using the Snapdragon X65 5G, Qualcomm was able to complete the world’s first 5G mmWave data connection, which supports a 200 MHz carrier bandwidth. Thanks to the power of the Snapdragon X65, this connection is expected to improve performance and speed for users while also expanding network coverage and decreasing power consumption of 5G devices.13
Qualcomm entered into a partnership with Cybertrust Japan Co., Ltd. and SB Technology Corp. to deploy a range of 5G-powered smart solutions. Using the Qualcomm IoT Services Suite, the companies assist businesses in the adoption of smart solutions.14
The companies will also be looking at using the Qualcomm Smart Cities Accelerator Program to develop smart city use cases such as smart factories, smart energy management, and smart parking.
In order to cater to the growing need for 5G deployment across industries, Qualcomm has partnered with Hewlett Packard Enterprises to develop a range of 5G virtual distributed units. The purpose of these units is to enable RAN (radio access network) platforms to support 5G networks.15
In addition to coping with the low latency and highspeed demands of 5G technology, the virtual distributed units are expected to lower the total cost of infrastructure ownership for network operators by 60%.16
Collaboration between Qualcomm and Hewlett Packard was spurred on by the increased demand for high-speed internet, particularly apparent as the popularity of hybrid on-premise and remote work soars.
How semiconductor companies are driving 5G innovation
Through their hardware innovations, semiconductor companies are providing the infrastructure that network carriers, smartphone manufacturers, and other electronics companies require in order to manufacture products that are capable of tapping into the full power of 5G networks.
Thanks to Qualcomm’s Snapdragon X65 5G Modem-RF System, smartphone, tablet, and personal computer manufacturers will be able to ensure that their devices have the capabilities necessary to support 5G connectivity. By improving the devices’ network coverage and latency, applications will become more responsive than ever, all while achieving greater power efficiency.17
Intel has released its own 5G modem for Windows laptops called the Intel 5G solution 5000. With over 30 laptop designs expected to support this modem through 2022, it is expected to improve app performance by 25%.18
Semiconductor companies are also boosting the abilities of 5g network stocks to establish the network infrastructure required to tap into the full power of 5G.
5G startup EdgeQ sampled its 5G Base Station-on-a-Chip to tier 1 customers, thereby bringing it closer to market.19 Consisting of a single integrated chip, this solution makes it less costly for network providers to build 5G access points. Furthermore, it will decrease the time and effort needed to install the access point as the chip already comes with the software needed to govern the functionality of the 5G network.20
Accelerating the 5G rollout
If you’re still debating whether or not to invest in 5G, following the activities of semiconductor firms in the industry will at least provide you with an indication of upcoming innovations, as well as their potential impacts. Should you feel unsure about which 5G stocks to buy, consider purchasing a 5G exchange traded fund such as the FIVG ETF by Defiance ETFs.
For current performance and holdings, please visit defianceetfs.com/FIVG
1 “Gartner Says Worldwide Semiconductor Revenue Grew 25.1% in 2021, Exceeding $500 Billion For the First Time”, 19 January 2022, https://www.gartner.com/en/newsroom/press-releases/2022-01-19-gartner-says-worldwide-semiconductor-revenue-grew-25-point-one-percent-in-2021-exceeding-500-billion-for-the-first-time
2 “AMD closes record chip industry deal with estimated $50 billion purchase of Xilinx”, 14 February 2022, https://www.reuters.com/technology/amd-closes-biggest-chip-acquisition-with-498-bln-purchase-xilinx-2022-02-14/
3 “Update: AMD’s Acquisition of Xilinx Receives Regulatory Go, Deal Closes At $49B”, 14 February 2022, https://www.anandtech.com/show/17251/amds-acquisition-of-xilinx-receives-regulatory-go-expected-to-close-feb-14th
4 “AMD Completes Acquisition of Xilinx”, 14 February 2022, https://www.amd.com/en/press-releases/2022-02-14-amd-completes-acquisition-xilinx
5 “AMD closes record chip industry deal with estimated $50 billion purchase of Xilinx”, 14 February 2022, https://www.reuters.com/technology/amd-closes-biggest-chip-acquisition-with-498-bln-purchase-xilinx-2022-02-14/
6 “AMD hits record 25.6% share of the overall x86 market”, 10 February 2022, https://www.techspot.com/news/93342-amd-hits-record-256-share-overall-x86-market.html
7 “AMD’s market cap surges past Intel following acquisition of Xilinx”, 16 February 2022, https://www.windowscentral.com/amds-market-cap-surges-past-intel-following-acquisition-xilinx
8 “NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2022”, 16 February 2022, https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-fourth-quarter-and-fiscal-2022
9 “NVIDIA and Google Cloud to Create Industry’s First AI-on-5G Lab to Speed Development of AI Everywhere”, 28 June 2021, https://nvidianews.nvidia.com/news/nvidia-and-google-cloud-to-create-industrys-first-ai-on-5g-lab-to-speed-development-of-ai-everywhere?nvid=nv-int-bnr-337274-vt26#cid=ix05_nv-int-bnr_en-us
10 “Nvidia Adds Arm Support to Its 5G Aerial Platform, Partners with Google on AI-on-5G Innovation Lab”, June 2021, https://www.enterpriseai.news/2021/06/28/nvidia-adds-arm-support-to-its-5g-aerial-platform-partners-with-google-on-ai-on-5g-innovation-lab/
11 “NVIDIA at the Edge: Metropolis Edge AI-on-5G Platform Delivers Intelligent Video Analytics Over 5G”, 9 November 2021, https://blogs.nvidia.com/blog/2021/11/09/metropolis-mavedge-ai/?nvid=nv-int-txtad-358056-p16#cid=ix05_nv-int-txtad_en-us
12 “Qualcomm’s new X65 5G modem downloads data at lightning-fast 10Gbps speeds”, 9 February 2021, https://www.cnet.com/tech/mobile/qualcomms-new-x65-5g-modem-downloads-data-at-lightning-fast-10gbps-speeds/
13 “Qualcomm Completes World’s First 5G mmWave Data Connection with Support for 200 MHz Carrier Bandwidth”, 25 July 2021, https://www.qualcomm.com/news/releases/2021/07/25/qualcomm-completes-worlds-first-5g-mmwave-data-connection-support-200-mhz
14 “Qualcomm Collaborates with SB Technology and Cybertrust Japan to Proliferate Smart Cities and 5G IoT Solutions”, 18 January 2022, https://www.qualcomm.com/news/releases/2022/01/18/qualcomm-collaborates-sb-technology-and-cybertrust-japan-proliferate-smart
15 “Hewlett Packard Enterprise and Qualcomm Technologies Announce Collaboration to Deliver the Next-Generation 5G Virtualized Distributed Unit Solutions”, 17 February 2022, https://www.qualcomm.com/news/releases/2022/02/17/hewlett-packard-enterprise-and-qualcomm-technologies-announce-collaboration
16 “Qualcomm and Hewlett Packard Enterprises to collaborate for 5G innovation”, 21 February 2022, https://www.techrepublic.com/article/qualcomm-and-hewlett-packard-enterprises-to-collaborate-for-5g-innovation/
17 “Qualcomm’s new X65 5G modem downloads data at lightning-fast 10Gbps speeds”, 9 February 2021, https://www.cnet.com/tech/mobile/qualcomms-new-x65-5g-modem-downloads-data-at-lightning-fast-10gbps-speeds/
18 “Intel announces its first M.2 5G modems for its Evo laptops”, 30 May 2021, https://www.digitaltrends.com/computing/intel-5g-modem-laptops-computex/#:~:text=At%20Computex%2C%20the%20company%20announced,the%20Intel%205G%20solution%205000.&text=More%20than%2030%20laptop%20designs,Intel’s%205G%20modem%20through%202022.
19 “EdgeQ Samples World’s First Software-Defined 5G Base Station-on-a-Chip to Market Leaders in Enterprise, Telco and Hyperscale Cloud”, 18 August 2021, https://www.businesswire.com/news/home/20210818005062/en/EdgeQ-Samples-World%E2%80%99s-First-Software-Defined-5G-Base-Station-on-a-Chip-to-Market-Leaders-in-Enterprise-Telco-and-Hyperscale-Cloud
20 “EdgeQ samples SoC for 5G and AI inference engines”, 18 August 2021, https://venturebeat.com/2021/08/18/edgeq-samples-soc-for-5g-and-ai-inference-engines/