Nothing shakes up a national government's priorities than a little international competition and a perceived threat to its place in the pecking order. During the Cold War, U.S. presidents cited the Soviet Union when garnering support for the country's space program, arms production and new highway system. President Biden has tapped this tradition in his recently announced national Infrastructure Plan, by emphasizing the national security need to remain competitive with China.
To understand where Biden's strongest commitment lies, therefore, it's worth looking at the areas of the US economy most threatened by Chinese advances. Of course the President has other reasons to designate funding to improve school buildings, working conditions of the homecare workforce and veteran's hospitals and federal buildings. But the real meat of this Plan is the digital infrastructure and manufacturing funding that are designed to boost the country's move towards 5G and preserve its global leadership in the tech space set to transform the fundamentals of the economy and the way people live, learn and pursue leisure.
Those holding 5G stock or looking to invest in 5G should take note of the crucial coalescence of national security interests – which translates into political will – and economic and technological readiness. As Chinese President Xi Jinping commented that "time and momentum are on our side,"1 and indeed some say that China's 5G is five times faster than the limited experiments rolled out by AT&T, Verizon and T Mobile,2 Biden's imperative is to ensure that the US pursues and preserves the economic and technological edge.
Why is 5G of International Strategic Importance?
5G is the bundle of technologies that supports connectivity between devices, people and locations that is unprecedented in terms of its speed and low latency. It includes network slicing to ensure that mission critical services such as autonomous driving or remote surgeries can operate without the risk of interruption. It will empower Edge computing and support the Internet of Things whereby trillions of devices connect, communicate and automate many areas of life using artificial intelligence. 5G will enable billions of sensors to provide vast swathes of data that Machine Learning techniques can process and harness towards defined goals. Smart cities, smart farming, streamlined logistics and fine monitoring to minimize environmental damage are all achievable in a 5G-enabled world.
It is hard to predict the exact form, pace and scope of the 5G revolution. While the telecom companies are leading its rollout, which industries or sectors will lead the implementation of its paradigm-shifting potential remains to be seen. What is becoming clear however, is 5G's vast economic potential. If 3G boosted GDP by 15%, and 4G by around 27% due to its introduction of apps, 5G could drive GDP growth of 40% or more by 2030.3 Whoever is most ready to pivot and lead in the technological spaces created by 5G will hold tremendous economic power. Biden's Digital Infrastructure Plan indicates his awareness of the role of 5G in the United States' financial growth and influence, its ability to defend U.S. security alliances and interests abroad, and the daily lives of Americans.
What Does Biden's Plan Promise for 5G?
Take computer chips as an example. The Infrastructure Plan promises $300 billion of investment into all facets of manufacturing from medical supplies to clean energy or businesses in rural community. However, $50 billion, one sixth of the whole sum allocated to manufacturing, is to be dedicated to reducing the U.S's reliance on overseas semiconductor manufacturers. The idea is to bring the locus of such a strategically important commodity home. The importance of this endeavor has been highlighted recently in shortages in the semiconductor market leading to reduced supply of computer chips. Prompted by a number of unanticipated events, not least the reverse-trend in demand of personal computers brought on by Covid-19 prompting millions to suddenly start working and studying from home, this has interrupted the manufacturing and supply of a wide range of items from cars to cell phones to laptops.
According to the Semiconductor Industry Association, the U.S. share of the worldwide chip manufacturing market has declined from 37% in 1990 to 12% today.4 Wireless network providers need these chips for their ultrafast 5G services and Biden's Plan shows he is aware of the strategic importance of these tiny powerhouses. In addition to funding for semiconductor manufacturing, the President has committed to investing $100 billion to give every American access to affordable, reliable and high-speed broadband. The aim is 100% coverage across the nation, along with lowered prices supported by increased transparency and competition among internet providers. Shocked by pictures of children and adults connecting to their online lessons or work in fast-food parking lots, for lack of home internet service, the Plan recognizes the imperative of bringing internet connectivity to both rural and urban Americans alike.
While there is some disagreement over whether the private or public sector should lead the charge towards 5G,5 the Plan has in general been met positively by tech industry leaders. Amazon CEO Jeff Bezos, for example, said that he supported the corporate-tax increase to pay for the Plan, in acknowledgement that investment will benefit everyone.6 This could be a good time to invest in 5G stocks as handset providers, the semiconductor industry, fiber-optic cable providers and others will all be a part of the big infrastructure push. No longer a matter of "if," 5G is now more a matter of "where" and "when?" And Biden's answer seems to be; in the USA and as soon as possible.
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The possible applications of 5G technologies are only in the exploration stages, and the possibility of returns is uncertain and may not be realized in the near future.
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