There is a lot of buzz lately surrounding 5G technology and how it will create exponentially higher speeds than anything consumers have experienced to date. 5G will not only interconnect people at lightning-fast speeds, but it will also change the way we interact with technology on a daily basis and make way for new applications like self-driving cars and augmented reality. Tens of billions of dollars are being spent by carriers globally to upgrade their core and infrastructure to make way for new services, creating lucrative opportunities for companies operating in the 5G space. In order for the 5G rollout to be successful, businesses from various sectors need to do their part, meaning semiconductor manufacturer NXP Semiconductors NV (NASDAQ:NXPI), data storage company Micron Technology Inc. (NASDAQ:MU), wireless infrastructure builder ADDvantage Technologies Group Inc. (NASDAQ:AEY), and wireless network operators T-Mobile US Inc (NASDAQ:TMUS) and AT&T Inc. (NYSE:T) all play an essential role in the much-anticipated 5G revolution.
Mobile providers and communications companies may be at the forefront of investor’s minds when they think of 5G, but without infrastructure providers like ADDvantage Technologies Group Inc. (NASDAQ:AEY) the technology won’t have the ability to reach its full potential.
After realizing the potential of the 5G infrastructure market, which is expected to grow at compound annual growth rate (CAGR) of 67.1% from US$784 million in 2019 to US$47.7 billion by 2027, ADDvantage made a series of strategic acquisitions and sold off its other assets to focus on the upcoming 5G rollout.
The fact is, without infrastructure providers like ADDvantage Technologies Group Inc. (NASDAQ:AEY) and 5G chipmakers like NXP Semiconductors NV (NASDAQ:NXPI) and Micron Technology Inc. (NASDAQ:MU), mobile networks like AT&T Inc. (NYSE:T) and T-Mobile US Inc (NASDAQ:TMUS) won’t be able to function the way they are intended to.
5G Infrastructure: The Backbone of the 5G Revolution
5G has been in the making for nearly a decade, however, the movement gained serious momentum at the end of 2018 when AT&T Inc. (NYSE:T) rolled out its 5G network in 12 US cities. The company has since expanded its coverage to 32 cities. Then in December 2019 T-Mobile US Inc (NASDAQ:TMUS) launched the first nationwide 5G network, which covers over 200 million Americans, as well as the first nationwide prepaid 5G. The company also launched the first 5G devices that work nationwide: the OnePlus 7T Pro 5G McLaren and the Samsung Galaxy Note 10+ 5G.
At present, the current 5G networks launched by companies T-Mobile and AT&T are using airwave bands that are similar to 4G networks and, in turn, are only getting double or triple the current speed. Meanwhile, companies like Verizon are launching 5G hotspots that consumers can use in their homes to gain access to that faster connection.
However, in order for 5G to reach its full capacity, cell towers across the globe need to ungo upgrades. Small cells, which are used to amplify wireless connections, are also in need of an upgrade to handle the sheer power of 5G. ADDvantage Technologies Group Inc. (NASDAQ:AEY) moved into the 5G infrastructure space in January 2019 when it acquired Fulton Technologies Inc and Mill City Communications, Inc. The two companies that offer turnkey wireless infrastructure services as well as network and enterprise communications equipment to the telecom industry in the US.
The acquisition provided ADDvantage Technologies Group Inc. (NASDAQ:AEY) with all of Fulton’s existing multi-year service contracts with the four major US carriers, national integrators, and original equipment manufacturers (OEMs) to assist with planned 5G rollouts throughout the next ten years, offering the company a strong entry into the market.
Following the acquisition, ADDvantage Technologies Group Inc. (NASDAQ:AEY) sold off its cable television assets to raise capital and focus on further solidifying its spot in the telecommunications and wireless infrastructure services markets.
The move proved to be a smart one after the company revealed a 101% increase in its fiscal 2019 sales revenue compared to the previous year. The company reported sales revenue of US$55.1 million for the 12 months ended September 2019, US$22.9 million of which came from its wireless segment.
According to ADDvantage Technologies Group Inc. (NASDAQ:AEY) President and CEO Joe Hart, the company has seen increased opportunities in the industry as wireless carriers prepare for the 5G rollout and the required densification of their networks.
The company will be releasing its Q1 2020 financial results on February 13, which will provide additional insight into how successful its transition into the telecommunications and wireless infrastructure markets has been.
5G Boosts Semiconductor Demand
Another essential aspect of the 5G revolution are semiconductors. The semiconductor industry, which has powered every generation of microchip for the last 50 years, has also been gearing up for the launch of 5G.
Indeed, semiconductors have played a vital role in virtually every technological advancement and thanks to the rapid speed of innovation that comes with 5G, these chipmakers are more essential than ever.
Several factors put a damper on the semiconductor industry in 2019, including a weaker price environment for memory, oversupply and tension surrounding the US-China trade war. Luckily, the market is expected to make a comeback in 2020 as the demand for 5G grows.
Last June, NXP Semiconductors NV (NASDAQ:NXPI) unveiled its integrated portfolio of RF solutions for 5G cellular infrastructure, industrial and commercial markets. The company’s comprehensive suite of solutions address 5G RF power amplification needs for base stations, from multiple-input-multiple-output (MIMO) to massive MIMO-based active antenna systems for cellular and millimeter Wave (mmWave) spectrum bands.
Micron Technology Inc. (NASDAQ:MU) is another chipmaker that has been gearing up for the 5G rollout. On February 6, 2020, the company launched “the world’s first mass-produced low-power DDR5 DRAM,” which will be used in the soon-to-be-released Xiaomi Mi 10 smartphone.
Micron’s new LPDDR5 DRAM addresses next-generation memory requirements for 5G with a 50% increase in data access speeds and more than 20% power efficiency compared to previous generations.
The launch of the Xiaomi Mi 10 and other 5G-capable smartphones are expected to be the biggest driver for the semiconductor industry this year. According to IHS Markit Technology, global semiconductor market revenue will rebound to 5.9% growth in 2020, with revenues rising from $422.8 billion this year to $448 billion next year.
At present, AT&T Inc. (NYSE:T) currently only sells one 5G-compatible smartphone, but the company plans to increase that number to 15 in 2020. T-Mobile US Inc. NASDAQ:TMUS), on the other hand, supports two 5G phones and said that it will also be introducing another 15 5G-compatible models this year.
Unlike NXP Semiconductors NV (NASDAQ:NXPI), Micron Technology Inc. (NASDAQ:MU), T-Mobile US Inc (NASDAQ:TMUS) and AT&T Inc. (NYSE:T), ADDvantage Technologies Group’s (NASDAQ:AEY) success this year won’t be reliant on consumer demand for 5G products. After all, in order for the rollout of 5G technology to be successful, the proper infrastructure needs to be in place.
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