The 5G revolution is taking Asia by storm and China is in the driving seat, not only developing this new technology within the country but also helping the transformation and innovation of many industries in Asia. Japan and South Korea are close behind, expanding their R&D capabilities as well as developing new products. 
The opportunities for investors are ripe and understanding the potential that many companies will have in the space and investing in them early on will make all the difference when it comes to reaping the rewards.
Undoubtedly, China will be one of the most aggressive countries to push 5G services in 2020 to bring digital to every person, home and organisation and build a more connected and intelligent world.
China Mobile, one of the three state-owned operators in the country with a mobile customer base of over 900 million users, aims to increase its 5G mobile subscribers to 70 and 100 million in 2020. This target is not far-fetched considering the attractive 5G pricing in China which will provide incentives for consumers to upgrade to 5G services.
The rise in subscribers will in turn lead to a ramp-up in sales of 5G smartphones in the next one to three years. This will benefit 5G chip manufactures and vendors while increasing their value add (vs. the 4G era).
Leading smartphone brands in China will all be reaping the rewards of this new revolution, such as the most popular Chinese smartphone brand Huawei, electronics company Xiaomi Corporation, consumer electronics and mobile communications organisation OPPO Mobile Telecommunications Corp. and Vivo Communication Technology, which designs and manufactures smartphones and accessories as well as software.
But it will not only be Chinese companies who will benefit from 5G adoption. Taiwanese semiconductor manufacturer Mediatek, the leading 5G chip designer globally, will profit from the 5G implementation in China, growing its business.
Of course, we cannot talk about 5G without considering Huawei. Last year was a tough one for the Chinese multinational with arrest of its CFO Meng Wanzhou in Canada – the daughter of its billionaire founder, Ren Zhengfei – as well as the repercussions of the trade war between the US and China.
The latter not only created weaker than expected customer demand for Huawei products in overseas market, but also led to operation difficulties for the company. However, its 2019 results showed the company had managed to overcome some of its obstacles. In fact, in 2019, Huawei increased sales by 18 per cent YoY to US$122bn and the company’s smartphone shipment grew by 17 per cent YoY to 240m units (vs. global smartphone shipment of 2 per cent YoY drop over the same period).
This success can be attributed to the company’s flexibility in diversifying orders to non-US supply chains as well as its efforts to speed up internal research and design capabilities, and the rollout of more aggressive strategies to gain more market share in its home market.
With plans to reduce any further supply chain management risks and opportunities for Chinese supply chain companies to participate in more projects with Huawei, we believe the Chinese multinational will still play an important role in the upcoming 5G era despite trade war uncertainties and risks ahead.
Looking at Asia, the adoption of 5G will help to speed up transformation and innovation in many industries, from transport and logistics to manufacturing and mining to name a few.
Some interesting projects are currently being trialled in many Asian countries. In China, we have seen R&D projects for 5G-based unmanned mining trucks, which can help to provide a safer and more efficient working environment for the mining industry.
In Korea, Samsung group has launched the smart manufacturing platform ‘Nextplant’ to help enterprises to improve production efficiency while reducing risks by adopting new technologies such as artificial intelligence, big data and the Internet of Things (IoT).
Technology companies have been spending much of their R&D budgets to enable new solutions for the future, such as machine learning, 5G chips, higher performance computing, autonomous driving car and IoT devices.
Among those that are well positioned to benefit from the trend is TSMC, the biggest global semiconductor foundry service provider. TSMC cooperates with all leading technology companies in the world (e.g. Apple, Nvidia, Qualcomm, Broadcom, Hisilicon, AMD, Mediatek) to manufacture chipsets designed by the customers, and it is in a prime spot in the 5G space.
What’s more, cloud gaming may yet be the next innovative area in the 5G era and as such could offer some interesting options for investors looking to make the most of this technology revolution.
Up until recently, gamers needed to invest heavily to buy a high powered, expensive gaming PC to play games. But the future could not look more different and consumers will only need to have a simple device (such as a Smartphone or standard game console), pay monthly subscription fee, to enjoy an astonishing gaming experience anywhere.
In China, Tencent, the online gaming giant with the biggest market share in the country, has developed a partnership with Nvidia Corporation, an American technology company which designs graphics processing units (GPUs) for the gaming and professional markets - and so has Japan’s Softbank. While in Korea, SK Telecom cooperates with Microsoft.
In particular Tencent has the chance to ride on the 5G trend to further expand its gaming market share. In addition, cloud gaming services require more memory consumption (to deal with more real timing data transmission) and storage space (to store the users’ gaming data), which bodes well for Korea memory vendors Samsung and Hynix.
The new 5G era brings many investment options for investors in Asia and Japan but knowing where to look and which stocks to invest in will require a clear understanding of the many emerging innovations.
Yoshiki Takeda is manager of the Asia Fundamental Growth fund of SuMi TRUST. The views expressed above are his own and should not be taken as investment advice.