For Immediate Release
Chicago, IL – November 4, 2021 – Today, Zacks Equity Research discusses Wireless Equipment, including QUALCOMM Incorporated QCOM, Nokia Corporation NOK, Clearfield, Inc. CLFD, Juniper Networks, Inc. JNPR and Motorola Solutions, Inc. MSI.
Link: https://www.zacks.com/commentary/1822620/3-wireless-stocks-likely-to-transcend-demand-supply-imbalance
The Zacks Wireless Equipment industry appears to be plagued by uncertainties triggered by supply chain disruptions and chip shortage, with large-scale investments to support the transition to 5G and high R&D and raw material costs further eroding margins. Also, tense bilateral trade relations between the United States and China have rendered a grim picture for the near future.
Nevertheless, Qualcomm, Nokia and Clearfield are likely to benefit in the long run from the increasing demand for state-of-the-art wireless products and services with wide proliferation of IoT driven by a faster pace of 5G deployment.
Industry Description
The Zacks Wireless Equipment industry primarily comprises companies that provide various networking solutions, wireless telecom products, and related services for wireless voice and data communications through scalable modular platforms. Their product portfolio encompasses integrated circuit devices (chips) and system software for wireless voice and data communications, analog and digital two-way radio, satellite telecommunications, wireless networking and signal processing, and end-to-end enterprise mobility solutions.
The firms also provide a broad range of routing, switching and security products, video surveillance, and machine-to-machine communication components that secure VPN appliances, enable intrusion detection and thwart data theft. Some firms even provide electronic warfare, avionics, robotics, advanced communications, and maritime systems to the defense industry.
What’s Shaping the Future of Wireless Equipment Industry
Chip Shortage Hurting Operations: With the exponential growth of mobile broadband traffic and home Internet solutions owing to the increasing work-from-home trend, digital sustainability has become the norm of the day and user demand for coverage speed and quality has increased manifold. This has resulted in huge demand for advanced networking architecture, in turn, forcing service providers to spend more on routers and switches as carriers aim to upgrade their networks to support the surge in home data traffic.
Further, to maintain superior performance standards, there is a continuous need for network tuning and optimization, creating demand for state-of-the-art wireless products and services. However, uncertainty regarding the continued chip shortage and supply chain disruptions extending beyond semiconductors have crippled the manufacturing operations of most firms, leading to curtailed production schedules.
This, in turn, has led to acute demand-supply imbalance, as the industry faces a dearth of essential fiber materials, shipping delays, and shortages of containers and other raw materials, affecting the expansion and rollout of new broadband networks. Extended lead times for basic components have negatively impacted the delivery schedule and escalated costs, prompting several industry groups to urge the government to take immediate corrective actions. Some notable firms within the industry are Qualcomm, Juniper Networks and Motorola.
Short-Term Profitability Compromised: The continued deployment of 5G technology across the globe is likely to propel the industry to newer heights. Moreover, 5G is expected to augment the scalability, security, and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT.
The industry participants are facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible …….
Source: https://finance.yahoo.com/news/zacks-industry-outlook-highlights-qualcomm-104110209.html