Warm Breeze from the US... 5G Equipment Stocks 'Blooming'

T-Mobile and Sprint Merger News Sparks Surge
"Expected to Lead Semiconductor Supercycle This Year"

[Asia Economy Reporter Oh Ju-yeon] Following the news that T-Mobile and Sprint, the 3rd and 4th largest US mobile carriers, received merger approval from the US Federal District Court, 5G-related equipment stocks are rebounding domestically. 5G equipment stocks surged in the second quarter of last year but showed weakness in the second half amid the US-China trade dispute. The securities industry is expressing optimism, with some forecasts suggesting that 5G will lead the semiconductor supercycle this year.

According to the Korea Exchange on the 18th, Solid's stock price, which was 5,710 won before the T-Mobile and Sprint merger approval on the 11th, surged 21.37% to 6,940 won as of 9:20 AM that day. The stock had grown from the 3,000 won range at the beginning of last year, nearly doubling to a closing price of 6,900 won on September 4th amid the 5G commercialization issue, but then fell to 5,050 won on January 8th this year, reacting to domestic and international volatility like other 5G-related stocks. The securities industry highlighted the expansion of 5G facility investments by global telecom companies and recommended Solid as a stock to watch among network equipment stocks.

KMw also rose 8.50% from 54,100 won to 58,700 won based on closing prices from the 11th to the 17th, while Ace Tech, RFHIC, and Oisolution increased by 7.14%, 7.23%, and 4.62%, respectively.

Since T-Mobile and Sprint announced plans to invest $9 billion to $12 billion annually in facilities for 3 to 4 years after the merger to support 5G services, Ericsson (Sweden) and Nokia (Finland), which directly supply equipment to them, are expected to benefit. Among domestic companies, KMw, Ace Tech, Solid, HFRC, and Dasan Networks supply parts such as 5G repeaters and base station equipment to Ericsson and Nokia.

In particular, HFRC showed a steep rise of 31.74% during the same period, demonstrating a sharp upward trend among 5G-related stocks. On the day, it continued its rise by hitting a 52-week high of 42,000 won during trading, up 4.87% from the previous day. Kim Ah-young, a researcher at Hana Financial Investment, said, "HFRC is the largest equipment stock with domestic repeater market and overseas momentum expected to start full-scale investment this year," adding, "Unlike other equipment stocks expected to take a breather in the first half, HFRC's sales will be reflected from the first quarter due to early 5G commercialization by Japanese telecom companies ahead of the Tokyo Olympics in July."

Lee Eun-taek, a researcher at KB Securities, emphasized, "The 2016-2017 semiconductor supercycle was driven by 4G, which caused a surge in data center demand, but this supercycle will be led by 5G," adding, "Especially in the 5G era, the Internet of Things (IoT) will be at the center of connectivity between devices."