Devices such as smartphones, tablets, or wearables and technologies including streaming, navigation and gaming are all possible thanks to global networks and the chips that connect devices to them. Without them, our devices are expensive paperweights. Faster data speeds, lower latency (the delay in getting data to its destination across a network) and more connected devices are driving new and improved applications, along with greater data creation and consumption. They are also fuelling the need to expand and ultimately upgrade existing networks.
The Digital Infrastructure and Connectivity UCITS ETF provides exposure to the companies facilitating today’s digital infrastructure. It features technologies such as 4G and 5G mobile-network connectivity, gigabit broadband, and the next generation of connective systems. The key subsectors in the ETF include data centres, networking equipment and related hardware, and companies focused on intellectual property. These areas are all prime beneficiaries of the surge in digital-infrastructure spending.
Marvell Technology: dealing in data
Grand View Research, a consultancy, forecasts that the data-centre (rooms or buildings housing computer systems) construction market will reach $340bn in 2027, a 64% increase from 2019. Market researcher Mordor Intelligence expects the 5G-infrastructure market to be worth $53bn by 2026, up from $3.5bn in 2020. These numbers bode well for Marvell Technology (Nasdaq: MRVL).
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Marvell derives 80% of its chip revenue from the data-centre, carrier-infrastructure and enterprise-networking markets. Its management team has a proven record of acquiring complementary businesses that have increased its exposure to these areas. Its recent $1.1bn purchase of data-centre switch manufacturer Innovium ensures that the group is far less influenced by short-term product cycles than other semiconductor firms.
Skyworks Solutions: cashing in on chips
Skyworks Solutions (Nasdaq: SWKS) produces radio-frequency (RF) semiconductors, which are used in the telecommunications, aerospace, automotive and defence fields. Skyworks, which counts Apple among its clients, is seeing its potential market grow as 5G becomes more widely adopted.
Each new generation (“G”) in mobile technology requires additional frequency bands per smartphone, which translates into greater RF-chip content per phone. Skyworks’s RF-to-dollar content has steadily risen from $3 per 2G device, to $8 per 3G device, to $18 per 4G device and $25 per 5G device. The burgeoning internet-of-things (IoT) market (made up of objects that connect and exchange data through the internet or communications networks with the help of software and sensors) is set to grow to $1.5trn by 2027, also driving fresh demand for RF chips.
Qualcomm: the future of communication
South Korea aims to deploy the world’s first commercial “6G” network in 2028, so the race is on to develop the necessary core standards and technologies over the next five years. Qualcomm (Nasdaq: QCOM) is a chip producer, but it also owns patents critical to 5G-communications standards. Earnings and cash flow are set to grow as 5G eclipses the 4G market and is eventually replaced by 6G.
-
HMRC confirms crypto ETN ISA rulesWith crypto ETNs now technically available for UK retail investors, HMRC has confirmed they can be held in an ISA – but there’s a complication
-
Pensioners targeted in fine wine scams – the tactics to watch forWine has emerged as the latest lure in investment fraud, with pensioners being specifically targeted by scammers
-
Pierre-Édouard Stérin wants to make France great againConservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging marketsOpinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Pinewood Technologies: a drive for growthPinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summerThe US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with folliesThe best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuationAEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefullyShares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
