Why the 5G Revolution Will Play Out on the Factory Floor

When it comes to 5G, there’s no denying this fact: It will change every industry. We’ve spoken this week about 5G’s impact on cloud computing, smart phones and self-driving cars, but another industry that’s not quite as “sexy” but will be equally transformed is manufacturing.

So, in today’s Market360, I’d like to explain why.

The reality is 5G permits manufacturers to pivot faster to new projects thanks to its nearly foolproof reliability, high bandwidth and ability to juggle multiple connections at once.

And they don’t have to worry about setting up new connections on the factory floor as they switch from fixed wireless deployments to mobile. ABI Research predicts wireless connections in factories will rise even faster than fixed-line connections from 2019 to 2030, reaching over five million 5G connections by 2025. (Fixed-line connections connect the internet to devices via a cable versus wireless connections, which don’t require a cable.)

Overall, manufacturing will account for the biggest chunk — $4.7 trillion — of any business sector in the early stages of 5G’s rollout, according to Omdia’s ICT Enterprise Insights 2019/2020 survey.

Take a smart factory in the industrial hub of Nanjing, China, for example.

The facility is a joint venture between 5G provider Ericsson (ERIC) and the Chinese government through Nanjing Panda Electronics Co.

Inside, self-piloting carts transport components across the factory floor. Artificial intelligence (A.I.) is used to find faults in products faster than humans can by using 5G to monitor about 1,000 smart screwdrivers and robotic arms on command. And the factory is only closed one day of the year.

The radio equipment that provides the 5G connectivity is set up at hundreds of base stations throughout the city, which also provide connection to a series of smart streetlights and on one of the city’s metro lines, according to Bloomberg.

Ericsson has said the smart factory has allowed it to cut maintenance work costs in half, save on capital spending and, in the first year of operation, make a 50% return on its investment.

But Ericsson won’t be the only manufacturer to benefit. Jefferies analysts estimate a 1% change in productivity or decrease in waste can increase profitability by up to 10%.

Now it makes more sense why China wants to add over 100 factories like this one in the future. The city of Guangzhou already has more 5G base stations than Europe. Over the next two years, the Chinese government wants all of its largest industrial parks completely covered by 5G.

The country is also providing subsidies, tax breaks and grants to coax innovative businesses into developing the next killer app or technology built on the back of 5G’s enhanced connectivity.

One of my Growth Investor stocks, Alibaba (BABA), plans on investing about $29 billion in research and development over the next three years to advance technologies like chips and wireless networks that can be used in factories of the future.

The reality is that when groundbreaking technologies like 5G debut across the world stage, lots of top tier companies with relevant experience move in to get their piece of the action.

But as I’ve said in previous Market360 articles, I’m not looking for any single provider or a specific application that will capture 5G’s explosive potential. The way forward is to find a company that’s capturing a part of nearly every facet of this technology.

Why You Need to Pay Attention to This 5G “Turbo Button” Technology

The stock I have in mind may be one of the largest semiconductor equipment manufacturers in the world, but it’s far from a household name like Ericsson or Alibaba.

However, it does have outstanding growth prospects. And it’s supplying products for many of the next-generation technologies 5G will enable, like machine learning, optics, sensors, and analytics for use in self-driving cars, robotics, cloud computing and the IoT.

For example, the company just released a product designed to accelerate the pace at which cutting-edge device manufacturers can spot defects and bring their products to market. It uses artificial intelligence and deep learning algorithms to find the defects that are most important for device performance.

But it doesn’t just have exciting growth potential, it has healthy fundamentals to support it over the long term, too.

To learn more about the stock, as well as a more in-depth look at the 5G space and where the real opportunity lies, sign up now and you’ll receive my special report The King of 5G “Turbo Button” Technology – absolutely free. After you join my Growth Investor service, you’ll have access to 36 other High-Growth stocks and 26 Elite Dividend Payers . These stocks come from a wide variety of industries – including cloud computing, artificial intelligence, biotechnology and much, much more!

If you’re looking for growth stocks and dividend-paying stocks, I encourage you to check out Growth Investor now. And don’t forget, once you do, you’ll have complete access to my special report The King of 5G “Turbo Button” Technology, too. It recently reported stunning earnings results, and I see significant upside ahead for the company.

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Alibaba (BABA)

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