2 Stocks for the Coming 5G Smartphone Revolution

2 Stocks for the Coming 5G Smartphone Revolution

Posted On October 7, 2019 2:29 pm

The rollout of fifth-generation (5G) wireless networks has already begun around the globe, and it won’t be long before we start seeing 5G-capable smartphones hitting the market. Goldman Sachs estimates that sales of 5G smartphones could hit 120 million units next year, which is a significant bump over its earlier shipment forecast of 50 million units.

The investment bank has upgraded its forecast based on China’s successful 5G rollout, while 5G deployments in the U.S. will also be a catalyst.  Apple (NASDAQ:AAPL) and Ericsson (NASDAQ:ERIC) are two stocks that could help investors make money from this coming 5G smartphone revolution. Let’s see why.

Apple’s 5G iPhone could be a hit in China

Apple has found the going tough in China lately thanks to declining smartphone sales in the country, but the iPhone 11 shows that the Cupertino tech giant hasn’t lost its mojo. Reuters reports that iPhone 11 pre-orders on Chinese e-commerce platform JD.com are up 480% as compared to last year’s iPhone XR.

Alibaba‘s e-commerce platform has also reported a 335% increase in iPhone 11 sales as compared to last year’s devices. Supply chain checks by analysts and investment banks also indicate that the device is in strong demand in China and other parts of Asia.

It looks like Apple’s decision to lower the price of the entry-level iPhone model has worked wonders in China, encouraging customers to upgrade their older iPhone models. But what’s worth noting is that demand for the iPhone 11 seems to be strong despite the lack of 5G.

Noted Apple analyst Ming-Chi Kuo of TF International Securities believes that a 5G iPhone is coming in 2020. The Mac maker has already settled its dispute with Qualcomm and is reportedly working on an in-house modem following the acquisition of Intel‘s smartphone modem business. But more importantly, Apple seems to have a plan to bring an affordable 5G device to the market.

According to Kuo, Apple could launch a smaller 5.4-inch iPhone next year with 5G support. A smaller screen could be Apple’s strategy of keeping costs lower so that users don’t have to pay a heavy premium for a 5G device. In fact, Kuo estimates that all of Apple’s 2020 iPhones will come with 5G support, according to a research note seen by MacRumors, and that will include a lower-cost device that will help it compete with Android offerings.

So don’t be surprised to see Apple corner a nice share of China’s 5G smartphone market next year with a value-for-money offering that could knock down the price barrier the current crop of 5G smartphones suffer from.

Ericsson is making a killing in China’s 5G market

5G smartphones can only run on 5G networks. So it makes sense to take a look at Ericsson, because it is playing an important role in setting up high-speed networking infrastructure in key markets.

A Chinese government source had said earlier this year that…

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