5G: View from the ground up.

Published on 11/05/19 | Saurav Sen | 1,463 Words

The BuyGist:

  • We go through the latest earnings calls of 8 companies in the 5G landscape. 
    • 1 Chip Manufacturer.
    • 2 Mobile Phone Service providers.
    • 3 Backhaul Equipment manufacturers.
    • 2 Optical Components companies.
  • We list out similarities and differences in their recent experience and outlook.
  • We take a step back and view these pieces of information in the following context: 
    • The China Issue
    • 5G Service Rollout
    • 5G Handset Sales

Why this article?

At The Buylyst, I’ve been digging into 5G since 2018. Here are all the relevant Worldview articles so far:

  1. Investing in 5G.
  2. Investing in 5G - Idea Screener.
  3. Investing in 5G 2019 Update.

So, why another one so soon? I’ll get straight to it. 3 reasons:

  1. A surprisingly bullish view of 5G by our top holding: TSMC.
  2. One of our “Watch” rated companies – Ciena – getting close to an “interesting” price range.
  3. One of The Buylyst’s 5G plays – Lumentum – is approaching its Price Target. As I write this, it has surpassed it. At some point it will need to be replaced, at least partially.

Over the past couple of weeks, I was noticing this apparent dissonance between Lumentum and Ciena. The former says 5G is accelerating sooner than expected, while the stock price of the latter is facing a downward trend. Is there an opportunity here?

So, I decided to get an undigested view of the state of 5G by listening to as many earnings calls as I could. I assembled a list of 8 companies in the 5G arena. They are:

  1. 1 Chip Manufacturer: TSMC – this is how it all started.
  2. 2 Mobile Phone Service Providers: Verizon and AT&T.
  3. 3 Backhaul Equipment Manufacturers: Ericsson, Nokia and Qorvo
  4. 2 Optical Components Manufacturers: Lumentum and Ciena

I found some common threads – three in particular:

  1. The China Issue.
  2. 5G Service Rollout.
  3. 5G Handset Sales.

I’ll summarize what I heard from each company regarding these 3 important data points.

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