Faster internet speed, at lower cost and ideal for Internet of Things connectivity. Such are the promises of Wi-Fi 6 and companies geared to that technology, which investors may be overlooking as the 5G cycle grabs the spotlight.
So says a team of
analysts, who see Wi-Fi 6 as a game changer. A team led by Daniel Yen told clients in a recent note that they see Wi-Fi 6 as an increasingly critical ally to 5G cellular networks, covering indoors internet communications, while 5G works the outdoors spaces.
While probably less well-known than 5G, Wi-Fi 6 began rolling out in 2019 and this year has begun to show up on more routers, laptops and other devices.
The biggest historical upgrade for Wi-Fi came with version 4 in 2008, while 2014 brought Wi-Fi 5, but less in the way of speed upgrades and band offerings. So the Morgan Stanley team is much more excited about what Wi-Fi 6 will bring.
Tiago Rodrigues, Wireless Broadband Alliance Chief Executive, projected earlier this year that “extending Wi-Fi into the 6GHz spectrum band can provide more Wi-Fi capacity than all the other bands put together.”
Morgan Stanley analysts see Wi-Fi 6 and 5G continuing to coexist for the next five to 10 years, with more devices in the home/office/campus/factory space needing both. By 2024, penetration for Wi-Fi 6 will reach 80% for key consumer devices, Morgan Stanley predicts. And profitability for the technology will improve, given “less severe pricing competition.”
The analysts like Taiwan-based
as the best stock proxy for that technology. Rated overweight, the team just lifted its price target to a “Street high” of NT$566, implying 50% upside. Also from Taiwan, they see another semiconductor name,
benefiting. MediaTek is also rated overweight, and they see 5% and nearly 10% of revenue linked to Wi-Fi 6 by 2021, 2022, respectively.
Another name is
Taiwan-based foundry partner and supplier to global smartphone brands, and rated overweight. Wi-Fi 6 revenue will compile 4% and 8% of its revenue for 2021 and 2022, respectively. Morgan Stanley also likes United Microelectronics Corporation, with expectations for the Taiwan company in the foundry space to draw 2% and 5% of revenue from Wi-Fi 6 for the next two years.