The 5G chipsets market may expand at CAGR of 52.7% in the next 7 years to over $23.5 billion
The UK is struggling to catch up in the 5G race, dropping one position in the global rankings since late 2019
A need for higher speed data connection and lower latency has increased demands for 5G equipment
According to some recent reports, the 5G chipset market is expected to grow over 50% to $23.5 billion in the next seven years. In this piece, we present 3 5G stocks that are likely to benefit from the emerging trend.
Rapid growth expectations
According to a recent market research report, the 5G chipsets market is estimated to expand at a compound annual growth rate (CAGR) of 52.7% from this year to 2027 and will be worth around $23.5 billion.
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Such rapid growth expectations for the 5G market are mostly based on the rising demand for high-speed data services, fast-developing smartphone technology, as well as the growth of IoT & connected devices. Still, the growth of the market is partly limited because of the expensive equipment, a fragmented spectrum harmonization model and emerging cybersecurity issues.
Based on the application, the largest share of the 5G chipset market this year is likely to fall under the smart cities section. The 5G network is utilized in facing key problems in smart cities, including infrastructure and housing management, providing quick access to services, transportation and logistics, public security and surveillance, efficient services management, intelligent mobility, environment & pollution control and more.
When it comes to the chipset type, the largest portion of the 5G chipset market is expected to fall under the application-specific integrated circuits segment. A big part of this segment is mainly accounted for its low cost of manufacturing for large volume production, better efficiency, higher performance compared to other ICs, and higher adoption by mobile network providers for cutting costs.
Based on frequency, the sub 6Ghz segment is projected to control the largest portion of the overall 5G chipset market this year. On the other hand, the 24Ghz and higher frequency section are expected to expand at the fastest CAGR during the forecast period. The expansion of this segment is largely owing to its capability to handle large bandwidth and high-speed data transfers.
Based on vertical, the segment estimated to develop with the highest CAGR during the forecast period is the security & surveillance. This is mostly thanks to the emerging security difficulties in urban areas, as well as attempts from city authorities to offer higher security and minimize reaction time in case of emergencies.
Even though the coronavirus pandemic has slowed down the adoption process of 5G services in the world, it had an insignificant effect on 5G as it’s still an emerging technology and only a few industries use 5G network services.
Furthermore, because of coronavirus, numerous industries were forced to base their operations on remote servers, which requires a higher speed data connection and lower latency. This will also have a positive effect on 5G in terms of demand.
UK must up its 5G game
As for the deployment of the 5G network, analyst house Omdia found that the UK has dropped one position in the global rankings since late 2019. According to Omdia, the UK is now in the 7th position.
South Korea, which has around 5.88 million subscribers, is still ranked number one, compared to the previous report when South Korea has had 4.67 million subscribers. Kuwait is sitting in the second position, while the United States is in the third.
When it comes to the UK, the country’s 4 major operators are working to grow their 5G footprint, and the government is also pouring lofty investments to provide rural areas with access to the advanced cellular network infrastructure.
“The UK is second only to Switzerland in terms of 5G deployment in the European market and as things stand is well-positioned to lead its continental rivals in the deployment of 5G – giving it a potential advantage in terms of developing next-generation industries,” said Stephen Myers, Principal Analyst at Omdia.
3 5G stocks to buy in October
Nokia (EPA: NOKIA) is already benefiting from the UK’s decision to bar Huawei from supplying its 5G equipment to telecom companies. The Finnish firm agreed a deal to supply its 5G equipment and services BT.
Nokia stock price fell around 30% from August highs in a major market correction. Shares closed lower for the sixth week in a row as they approach the 3.05 mark, offering a major buying opportunity. Levels above the 4.00 handle will be targeted by the bulls.
As a company that manufactures semiconductor devices used across a wide variety of sectors, Xilinx (NASDAQ: XLNX) has seen its revenue consistently rise.
Xilinx stock price jumped around 50% from its lows in March as the buyers aim to capitalize on the broken descending trend line. The first target on the upside is $116, signalling a quick upside of over 10%.
Qualcomm (NASDAQ: QCOM) is definitely one of the prime candidates to benefit from the 5G revolution. The company has reportedly nearly 700 patents registered, including its flagship products Snapdragon chips, which are widely used in the mobile phones industry.
In August, Qualcomm share price rose to an all-time high near $124.00. Eventually, a pullback to the $96 handle would provide a massive opportunity to invest in Qualcomm shares and benefit from the company’s role in the 5G infrastructure rollout.
A new market research report showed that the 5G chipsets market is projected to grow at a compound annual growth rate (CAGR) of 52.7% from 2020 to 2027 and will achieve worth of about $23.5 billion. Xilinx, Qualcomm and Nokia seem well-positioned to gain amid the 5G network rollout.
NICE Ltd. (Nasdaq: NICE) (the "Company") announced today the pricing of its previously announced offering of $400,000,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the "Convertible Notes") in a private placement under the Securities Act of 1933, as amended (the "Securities Act"). NICE also granted to the initial purchasers of the Convertible Notes an option to purchase up to an additional $60,000,0000 aggregate principal amount of the Convertible Notes within a 13-day period beginning on, and including, the initial closing date. The offering of the Convertible Notes is expected to close on August 27, 2020, subject to customary closing conditions.
The Convertible Notes will not bear regular interest. The Convertible Notes will mature on September 15, 2025, unless earlier prepaid, redeemed or exchanged. The Convertible Notes will be general unsecured obligations of the Company.
The Company may not redeem the Convertible Notes prior to September 21, 2023, except in the event of certain tax law changes. On or after September 21, 2023, the Company may redeem, for cash, all or part of the Convertible Notes if the last reported sale price of its ADSs has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of the redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Prior to the close of business on the business day immediately preceding June 15, 2025, the Convertible Notes will be convertible at the option of the holders only upon the satisfaction of specified conditions and during certain periods. On or after June 15, 2025 until the close of business on the second scheduled trading day preceding the maturity date, the Notes will be convertible at the option of the holders of the Notes at any time regardless of these conditions. The Convertible Notes will be convertible for (i) cash, (ii) American Depositary Shares (the "ADSs"), each representing one fully paid ordinary share, par value NIS 1.00 per share of the Company or (iii) a combination thereof, at the Company's election. The conversion rate will initially be 3.3424 ADSs per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $299.19 per ADS). The conversion rate will be subject to adjustment in some events. In addition, following certain corporate events that occur prior to the maturity date or the Company's delivery of a notice of redemption, the Company will under certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event or to convert its Convertible Notes called for redemption in connection with such notice of redemption, as the case may be. The initial conversion price of the Convertible Notes represents a premium of approximately 37.5% to the $217.59 closing price of the ADSs on August 24, 2020.
If the Company undergoes a fundamental change (as defined in the indenture governing the Convertible Notes), holders may require the Company to prepay for cash all or part of their Convertible Notes at a prepayment price equal to 100% of the principal amount of the Convertible Notes to be prepaid, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change prepayment date.
The Company expects that the net proceeds from the offering of the Convertible Notes will be approximately $393 million, after deducting the initial purchasers’ fees and estimated offering expenses (or approximately $452 million if the initial purchasers exercise in full their option to purchase additional notes). The Company intends to use the net proceeds of the offering for general corporate purposes, which may include repayment of our outstanding term loan under our credit agreement at or prior to maturity in December 2021.
The offering is being made to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Convertible Notes, any of the ADSs issuable upon conversion of the Convertible Notes and the ordinary shares of the Company represented thereby have not been and are not expected to be registered under the Securities Act or under any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
This press release is being issued pursuant to Rule 135(c) under the Securities Act, and it does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.
About NICE Ltd.
NICE (Nasdaq: NICE) is the worldwide leading provider of both cloud and on-premises enterprise software solutions that empower organizations to make smarter decisions based on advanced analytics of structured and unstructured data. NICE helps organizations of all sizes deliver better customer service, ensure compliance, combat fraud and safeguard citizens. Over 25,000 organizations in more than 150 countries, including over 85 of the Fortune 100 companies, are using NICE solutions.
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements may be identified by words such as "believe," "expect," "seek," "may," "will," "intend," "should," "project," "anticipate," "plan," and similar expressions. Forward-looking statements are based on the current beliefs, expectations and assumptions of the Company's management regarding the future of the Company's business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include the expected completion of the offering of the Convertible Notes and the Company's intended use of the net proceeds of the offering.
Forward looking statements are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. The Company cautions that these statements are not guarantees of future performance, and investors should not place undue reliance on them. There are or will be important known and unknown factors and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These factors, include, but are not limited to, risks associated with changes in economic and business conditions, competition, successful execution of the Company's growth strategy, success and growth of the Company's cloud Software-as-a-Service business, difficulties in making additional acquisitions or effectively integrating acquired operations, products, technologies and personnel, the Company's dependency on third-party cloud computing platform providers, hosting facilities and service partners, rapidly changing technology, cyber security attacks or other security breaches against the Company, privacy concerns and legislation impacting the Company's business, changes in currency exchange rates and interest rates, the effects of additional tax liabilities resulting from our global operations and various other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the "SEC"). In addition, COVID-19 is contributing to a general slowdown in the global economy and may affect the Company's business, results of operations, financial condition and our future strategic plans. At this time, the extent to which COVID-19 may impact the Company's financial condition or results of operations is uncertain. Furthermore, due to our subscription based business model, the effect of COVID-19 may not be fully reflected in our results of operations until future periods. You are encouraged to carefully review the section entitled "Risk Factors" in our latest Annual Report on Form 20-F and our other filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance. The forward-looking statements contained in this press release speak only as of the date hereof, and the Company undertakes no obligation to update or revise them, whether as a result of new information, future developments or otherwise, except as required by law.
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