The rollout of 5G wireless networks around the world is one of the biggest potential stock market catalysts in the coming years — especially for semiconductor stocks. Some companies will certainly benefit from the 5G network boom more than others.
BofA Securities analyst Vivek Arya said this week that radio frequency chip makers will be some of the biggest 5G winners. Arya estimates that 5G devices will average between $15 and $16 in RF content per device, up from just $9 per 4G device.
How To Play 5G With RF Names
BofA is forecasting 14% compound annual revenue growth for the RF industry from 2020 through 2022 after the industry flatlined at around $12.5 billion annually over the past three years.
About 650 million 5G phone shipments are expected in 2022, up from 170 million this year, the analyst said. Skyworks Solutions Inc (NASDAQ: SWKS), Qorvo Inc (NASDAQ: QRVO) and QUALCOMM, Inc. (NASDAQ: QCOM) are particularly well-positioned given their relationships with suppliers, he said.
“Separately, SWKS benefits from strong positioning in IoT markets; QRVO strength in infrastructure, and AVGO strength in networking/compute/software.”
Initial 5G launches in China have been solid, Arya said. While bears argue that 5G devices lack “must-have” features, commercial momentum will drive mainstream adoption over time, the analyst said.
Bank of America has Buy ratings on all three stocks mentioned, The firm has a $140 target for Skyworks, a $120 price target for Qorvo and a $100 target for Qualcomm.
5G phones will likely follow the same successful upgrade template that has worked repeatedly in the tech world for decades. 5G phones will initially be a novelty, but they will soon be the universal standard as 4G phones are slowly phased out over time.
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