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).
Subscribe to 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 warning after scammers target 170k taxpayers – how to stay protectedScammers are using increasingly sophisticated methods to trick people into sharing personal details or paying for fake self assessment tax refunds
-
Average homes in every English region are now liable for stamp duty – how much will you pay?As average house prices in every English region are now above the stamp duty threshold, we look at how much tax you will pay.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
The rise of Robin Zeng: China’s billionaire battery kingRobin Zeng, a pioneer in EV batteries, is vying with Li Ka-shing for the title of Hong Kong’s richest person. He is typical of a new kind of tycoon in China
-
Europe’s forgotten equities offer value, growth and strong cash flowsOpinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
-
How retail investors can gain exposure to Lloyd’s of LondonIt’s hard for retail investors to get in on the action at Lloyd’s of London. Here are some of the ways to gain exposure
-
The flaw in Terry Smith’s strategy at FundsmithOpinion Fundsmith has invested in some excellent companies, but it has struggled to decide when to sell, says Max King
-
The goal of business is not profit, but virtueOpinion Serve your customers well, and the profits will follow, according to a new book. It rarely works the other way around, says Stuart Watkins
