2019 has been a banner year for 5G…

City after city is “flipping the switch” on their 5G wireless networks.

There have been 5,900 5G deployments around the world. The majority of these 5G networks – about 4,000 – are live in the United States.

2019 also saw the release of the first 5G-enabled devices. LG, Samsung, and Huawei have all released 5G phones.

But as exciting as 2019 was for the 5G wireless rollout, it will be nothing compared to what we will see in 2020.

Today, I want to show investors what they can expect from these revolutionary networks as we head into the new year.

The Rapid Rise of 5G

My longtime readers will already know about 5G. But for newer readers, 5G is the next generation of wireless networks. And 5G wireless speeds will be, on average, 100 times faster than today’s 4G speeds.

And to give you an idea of just how fast 5G is spreading, look at the below chart.

Wireless technology company Ericsson releases a mobility report every quarter. This report tracks the global growth of mobile data traffic and wireless adoption over time.

I look forward to reading this report every quarter. The report is a great way to get a feel for how rapidly wireless networks are growing around the world and how quickly data traffic is increasing over wireless networks.

It also helps the industry determine how much new infrastructure it needs to build. How many new data centers should it build? How many new fiber lines should it lay? How many new routers and switches do existing networks need?

And for technology investors like us, the report also shows us how fast people are adopting new technology.

Ericsson’s third-quarter 2019 report (the most recent edition) came out with stunning projections.

By the end of 2025, it expects 5G networks to have 2.6 billion subscribers, covering 65% of the world’s population. And it expects those subscribers to generate about 45% of the world’s mobile data traffic. Incredible.

This tells us how quickly 5G is spreading. And it indicates that adoption will be very rapid.

Plus, the mobility report shows that data traffic continues to double every 14–15 months.

The increase in wireless data has already gone exponential… And that’s only going to kick up a notch with 5G.

And as 5G spreads, we will see a tidal wave of new devices that can connect to these networks. That’s one of my predictions for 2020. That will be the year we see the mass adoption of 5G devices.

Everybody Will Have a 5G Phone

Wireless network rollouts like 5G happen in three phases. They are…

  • Phase One: Network Infrastructure

  • Phase Two: Devices

  • Phase Three: Services

We are well into Phase One. Network infrastructure – 5G towers, routing equipment, and so forth – is being erected in major cities around the world.

We entered Phase Two in 2019 when early 5G devices went on sale. But 2020 will be the year that Phase Two kicks into high gear.

The latest industry numbers project that 300 million 5G-enabled smartphones will be shipped in 2020. But I am starting to think that number is too conservative.

That’s because earlier this month, Apple reached out to its suppliers to increase its manufacturing numbers in preparation for the 5G-enabled iPhone launch, which we expect to come next September 2020.

Apple told suppliers that it now expects to ship more than 100 million 5G-enabled iPhones. That’s up from the company’s previous projection of 80 million 5G iPhones.

This tells us that demand for the 5G iPhone is exploding, even before the product is announced. We will see record-high conversion rates from old iPhone models to the new 5G iPhones.

That’s something that hasn’t happened in years. The last several iPhones just haven’t been a big step up, so users didn’t upgrade right away. There was no reason to.

The below chart gives you an idea of this trend. In 2019, smartphone users were waiting 33 months on average to get a new device.

But with 5G, the new iPhone will be revolutionary. Clearly, Apple expects to see a massive wave of upgrades right after the launch.

And here’s the big insight from this…

Apple’s smartphone market share is only 12–13% globally in any given quarter.

Many people think Apple dominates the smartphone space because the iPhone is so popular. I’ve even heard some very smart people claim that Apple has a monopoly. But the fact is, it’s just not that big of a smartphone player at 12–13%.

My point is that if Apple plans to sell 100 million 5G iPhones, how many 5G devices will Samsung, LG, Huawei, and the other big global manufacturers sell? After all, Apple is just a small percentage of the overall smartphone market.

Mark my words. Sales of 5G phones will far surpass 300 million. As I said, there will be a tidal wave of 5G devices in 2020. I can’t wait to get my 5G-enabled phone…

Investing in Phase Two

What does this mean for investors?

As Phase Two – the devices phase – kicks into high gear next year, investors will want exposure to companies that produce essential components that go into these 5G devices.

One of my favorite companies in this space is Taiwan Semiconductor Manufacturing (TSM). TSM manufactures 5G semiconductors for Qualcomm and Huawei. For every 5G semiconductor it manufactures, there is a 5G-enabled phone that will be shipped.

At writing, readers of one of my investing research services are up as much as 53% with TSM. And remember, we’re still in the early days of Phase Two.

And, of course, after Phase Two comes Phase Three. That’s when we’ll see applications and services that run over these 5G networks. I expect we’ll begin to enter Phase Three near the end of 2020.

The bottom line is that 2020 will be the year of 5G. This will be one of the most profitable investment trends of the next decade. Ninety-nine percent of investors don’t realize this yet. One day, they’ll wake up to a 5G-powered world and wonder how they missed it. These investors will regret that they never invested in key 5G companies when they had the chance.

I encourage you not to be one of them.

Regards,

Jeff Brown
Editor, Exponential Tech Investor

P.S. I expect Taiwan Semiconductor Manufacturing to do well in the years ahead. But it will not be the biggest winner of the 5G boom. There are several small-cap 5G stocks that will soar as this trend takes off. I expect to see at least 10x gains from a handful of 5G stocks.

And there’s one 5G small-cap stock that’s at the top of my list. I’ll give you all the details right here.