“The total amount of economic impact of 5G in 2035 is going to be $13.2 trillion,” says Qualcomm CEO Steve Mollenkopf. “You can think of (the growth of 5G) in two phases. One is a handset phase and the second one is a phase related to industries using 5G to accelerate digitization. They’re requiring the second rev of 5G. This is really about all the features to make high reliable factories. There are special features that we have put into the standard which will come out in a second, third, and fourth-wave over the next decade.
Total Economic Impact of 5G To Be $13.2 Trillion by 2035
The serviceable available opportunity for 5G is going from $65 billion in 2019 to $100 billion in 2022. In really just three years, it grows a dramatic amount. It just gives you a sense of how important 5G will be to Qualcomm’s business. I also gave a number (at the company’s analyst day) that said the total amount of economic impact of 5G in 2035 is going to be $13.2 trillion. So 5G is going to be an important thing. Qualcomm really at this point does not have an opportunity problem.
You should think of 5G (and how it impacts Qualcomm) in two phases. The first phase is essentially we make more money out of the existing cellular business just because it’s going to 5G. It’s going to go to 5G over the next decade. We will sell more expensive products and we get a bigger portion of the phone BOM in the products that we sell. Then, in addition, the technology that’s required in order to be successful in that market is also very important in other markets that are now taking on 5G.
Auto is the best first example of that. But there are many others behind it. We essentially have the ability to take the R&D that we’re producing in the smartphone space and leverage it multiple times for the benefit of the shareholders.
Industries Using 5G To Accelerate Digitization
Investors are really going to see it over the next two quarters for us and actually through the next year. If you look at our last earnings call we essentially gave I think a strong guide for our licensing business, which sits as a proxy for the Christmas season selling. Then we said we’re going to give a soft indication of what we thought the March quarter would be. We essentially said you’re going to see 5G start impacting our product business at that time. It’ll come in two phases during the calendar year. One at the beginning of the year and then another one in the second half of the year when some flagship launches launch in both places.
You can think of (the growth of 5G) in two phases. One is a handset phase and the second one is a phase related to industries using 5G to accelerate digitization. Lucky for us, the handset phase, which is the first one, is probably the largest market and it’ll instantly happen. It will happen over the next decade starting next calendar year. In a month you’ll start to see that in the results of our business. You’re going to see that kind of play out over a long period of time as the handset market does now.
Then you go into these adjacent markets, the digitization and industrial. They’re requiring the second rev of 5G. There are multiple revs of the standard. The first one is based on handsets. The second one is really about all the features to make high reliable factories. We talked a little bit in the past about healthcare, gaming, and those things. There are special features that we have put into the standard which will come out in a second, third, and fourth-wave over the next decade. It’s that second wave which is really about the other industries besides the handset.