Back to top

Analyst Blog

In the fast pacing automotive world where connections and communication play a major role, German car manufacturers – Audi, BMW and Daimler, announced their partnership with mobile telecommunication companies – Ericsson (ERIC - Free Report) , Huawei Technologies Co. Ltd, Intel Corporation (INTC - Free Report) , Nokia Corporation (NOK - Free Report) and Qualcomm Inc. (QCOM - Free Report)   to form the 5G Automotive Association. The main purpose behind this alliance is to deal with society's connected mobility and road safety needs by upgrading the infrastructure required forconnected automated driving, easy access to services and integration into smart cities, and intelligent transportation,with the help of LTE and 5G advancements.

Such joint ventures open up new technological and business opportunities for both the automotive and information and communication technologies (ICT) industries. This alliance also plans to handle technical and regulatory issues by using next generation mobile networks and integrating vehicle platforms with connectivity, networking and computing solutions.

This alliance reflects another new venture of Germany's carmakers to build competent technology, thus posing threat against new rivals like Uber and Google, who are also focused on developing their autonomous driving technology.

What is 5G?

It is the next major phase of mobile telecommunications standards after that of the 4G/IMT. According to Next Generation Mobile Networks Alliance, 5G networks allow data rates of tens of megabits per second for millions of users, 1 Gb per second simultaneously to people on the same office floor, increased spectral efficiency compared to improved 4G coverage, greater signaling efficiency, and lower latency compared to LTE. One of the main purposes of 5G standardization is to allow multiple devices to connect and operate through the Internet of Things (IoT).

Major U.S. telecom behemoths – Verizon Communications , Sprint Corp. (S - Free Report) , T-Mobile US (TMUS - Free Report) and AT&T Inc. (T - Free Report) – are all moving ahead with their 5G plans and aim to launch their 5G networks in the coming years. Moreover, they have either tested or are in the process of testing the new technology. However, Verizon seems to have the lead, as evident from its plans to deploy 5G wireless networks in 2017.

The commercial 5G handsets for 2020 will be first made available in South Korea and Japan. The next round of launch will be in the U.S., the UK, Sweden and the UAE in 2021 with tens of millions of 5G handsets to be sold by 2022. By 2025, the sales figure is expected to exceed 300 million.

The 5G Automotive Association

The 5G Automotive Association is a global association that aims to develop, test and promote communications solutions, support standardization and accelerate commercial availability and global market penetration. It also intends to nourish the ‘connected car’ technology. Additionally, the collaboration is looking forward to produce and coordinate use cases, technical requirements and implementation of strategies, address vehicle-to-everything technology requirements such as wireless connectivity, security, privacy, authentication, distributed cloud architectures and run joint innovation and development projects.

The Bottom Line

5G marks a revolution in the field of communications and is leading to a number of strategic alliances. It is expected that such alliances should lead to higher adoption of the technology going forward.

Computer and Technology Sector Price Index

 

Computer and Technology Sector Price Index

Intel Corporation carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Now See Our Private Investment Ideas

While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>