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Keysight Inks Deal Initiated by UNISOC to Propel 5G Projects

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Keysight Technologies, Inc. (KEYS - Free Report) and 17 other associated industry partners recently inked an agreement set in motion by UNISOC at China IC Summit.

Shanghai, China-based UNISOC is a notable fabless semiconductor company engaged primarily in core mobile chipsets supporting communication standards for 2G / 3G / 4G/ 5G.

The industry players are collaborating to drive overall economic growth with focus on accelerated research and commercialization of 5G. The proposal aims to democratize the benefits of 5G by promoting businesses to join the open 5G innovation projects.

Notably, Keysight’s robust network emulation solution was deployed on 5G Pilot V2 mobile prototype of UNISOC to demonstrate 5G New Radio (NR) call.

To quote UNISOC’s vice president of marketing, Nan Mingkai, “Keysight’s leading 5G solutions and deep technical expertise is helping us accelerate the pace of 5G commercialization.”

Strength in Keysight’s comprehensive test and measurement solutions bodes well. The company’s 5G product design validation solutions ranging from Layer 1 to 7 enable telecom and semiconductor companies to accelerate their 5G initiatives.

5G Initiatives to Benefit Keysight’s Top Line

Keysight’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. The solutions offer cost-efficient test techniques with high flexibility and control capabilities, reducing time-to-market.

Notably, Keysight and UNISOC had earlier inked a MoU (or Memorandum of Understanding) aimed at development of 5G chipset design, test, verification, and measurement.

Moreover, the company is also part of China-based Phase I Step 3 5G trials led by IMT-2020 Promotion Group.

Furthermore, Keysight’s collaborations with the likes of Softbank, OPPO, ASUS, Motorola, Verizon Communications and Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated (QCOM - Free Report) , are enabling it to achieve 5G commercialization related milestones.

Additionally, tie-ups with fabless semiconductor companies engaged in providing 5G chipsets, like UNISOC, MediaTek, among others, enhances Keysight’s prospects in the 5G domain, favoring top-line growth.

Upbeat 5G Trends Enhance Growth Prospects

Per ResearchAndMarkets data, global 5G market is expected to reach $251 billion by 2025, witnessing a CAGR of around 97% from 2020. Further, per MarketsandMarkets estimates, communication test and measurement market is projected to attain a value of $6.69-billion by 2020 at a CAGR of 9.3% from approximately $4.28 billion in 2015.

Intensive infrastructure investments in 5G push and positive trial testing results are tailwinds in this regard. Smart connected homes, hospitals, factories and cities along with self-driving vehicles remain key beneficiaries of 5G.

Backed by these aforementioned factors, we believe Keysight is well-poised to capitalize on the ongoing upbeat trends in the 5G market and strengthen its competitive position in the domain.

Restructuring Activities

In a bid to remove ambiguity in the reporting processes, Keysight is removing Services Solutions Group (“SSG”) as a discrete reportable segment, from first-quarter fiscal 2019.

The financial reporting is realigned into three segments, namely Ixia Solutions Group (“ISG”), Electronic Industrial Solutions Group (“EISG”)and Communications Solutions Group (“CSG”).

Keysight restructured reporting segments as part of its go-to-market plan. Notably, SSG revenues will be reflected in CSG and EISG adjusted according to the respective services delivery.

Zacks Rank & Other Key Picks

Currently, Keysight sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader technology sector are STMicroelectronics N.V. (STM - Free Report) and Marvell Technology Group Ltd. (MRVL - Free Report) , both flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for STMicroelectronics and Marvell are currently pegged at 5% and 9.4%, respectively.

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