Forward thinking: David Thornton on the 5G revolution

The next generation in broadband technology will revolutionise how we work, play and invest

5G broadband is set to be nothing short of a paradigm shift that will fundamentally affect our daily lives and offer the potential for investment returns to match.

At the most basic level, new generations are defined by ever greater bandwidth and the speed increases that come with it.

“The data speeds will speed up, latency speeds to communicate across the network will speed up, and it will support up to 10 times the number of devices connected to the network,” says Kanish Chugh, head of distribution at ETF Securities, an exchange traded fund provider.

For home use, low latency speed may only provide faster load times for streaming videos, but imagine the need for realtime data transfer when you go in for surgery undertaken remotely by an overseas surgeon, or when running a fleet of postal delivery drones.

Chugh regards 5G as a megatrend due to its key ingredients.

“It’s long term and an area of high innovation and disruption, you want it to be intertwined with government support, and you want it to be in line with demographic changes,” he says.

“If it’s supported by government and intertwined with democratic change, it’s going to lead to a structural change. Without those things, it’s not a megatrend.”

The boost to economic activity is forecast to be enormous.

The San Diego tech company Qualcomm estimates that by 2025 5G will enable $12.3 trillion in economic output and support 22 million jobs worldwide.

Of course, bandwidth means nothing without capabilities to match. 2G gave us SMS and picture messages, 3G enabled internet browsing and 4G made video streaming par for the course.

The impact of 5G will be a dovetailing evolution. There are technologies that will make use of the faster speeds straight off the bat, and then there’ll be technologies that will be invented for it.

Expect to see fast progress in automation both at home and in commercial settings.

“It will transform the so-called ‘internet of things’ – how devices are connected to one another. Home automation, industrial automation, medical devices, they’ll all benefit from 5G.”

Chugh points to the semiconductor industry as one that will benefit from 5G instantly. “You need computer chips that can handle the faster connectivity of 5G, so expect to see the semiconductor industry develop quickly.”

Qualcomm is the prototypical example here because it creates software and chips for use in wireless equipment.

Also expect to see a productivity boost in automation.

“That’s where we see benefits in manufacturing to firms like Rockwell Automation, which is working in robotics and artificial intelligence in the manufacturing sector,” says Clugh.

Gaining exposure to 5G doesn’t mean only buying the well-known consumerfacing companies; there are companies all along the supply chain that will be beneficiaries of 5G.

“You don’t necessarily need exposure to Apple or Samsung. There are companies like Koh Young, which provides equipment to inspect chips,” says Chugh. “When Apple and Samsung produce their phones, they use Koh Young technology to 3D-inspect them.”

An easier way to gain access to the 5G ecosystem is through the use of an exchange traded fund (ETF).

“Our TECH ETF (ASX: TECH) provides exposure to semiconductors, big data, the internet of things and also software providers,” says Chugh.

Similarly, BetaShares offers exposure to Aussie technology companies through its ATEC fund, cloud computing through CLDD, and global robotics and artificial intelligence through RBTZ.