Pedro PalandraniThe Internet of Things (IoT) is ripe to transform many sectors of the global economy, receiving a powerful tailwind from the launch of 5G networks that will boost the speed and capacity for connected devices. In this post we further explore this theme by highlighting four companies that represent key segments of the Internet of Things ecosystem targeted by the Global X Internet of Things ETF (SNSR), including:
- Consumer IoT Technology – Dexcom
- Networking Infrastructure/Software – Cisco
- Semiconductors and Sensors – Skyworks
- Equipment, Vehicle and Infrastructure/Building Technology – Rockwell Automation
Consumer IoT Technology: Dexcom
In the healthcare industry, there has been a proliferation of connected devices, like wearables that monitor and collect patient data to improve healthcare outcomes. Dexcom has positioned itself as such a company, leading in the diabetes management and continuous glucose monitoring (CGM) space. Their latest generation product, the Dexcom G6, takes glucose readings in real-time and sends data wirelessly to a smartphone, allowing the information to be stored and ultimately shared with family members and doctors. Using a connected device to collect real-time information introduces a revolutionary approach to glucose monitoring, as opposed to the previous method of pricking one’s finger a few times a day. Access to real time data can alert patients and doctors to take necessary actions much sooner than through intermittent processes. On the near horizon, Dexcom’s soon-to-be-released G7 sensor will be fully disposable, has a smaller footprint, costs over 50% less to manufacture, and has a 15 ½-day life. Such advances could open the opportunity to improve glucose monitoring for a greater portion of the estimated 415 million people with diabetes in the world.1
Networking Infrastructure/Software: Cisco
The internet’s backbone that allows billions of devices to smoothly connect consists of an extensive infrastructure from networking and equipment makers, including wireless systems, switches, routers, controllers, servers, and other hardware and software systems. With over 80% of the world’s internet traffic traveling across its connections, Cisco has consolidated as a leader in this market with its technology solutions.2
In addition to its leading position in networking equipment, Cisco has been carrying out a multi-year transformation toward more software and subscription-based offerings to increase their amount of recurring revenue. Over time, hardware improvements have grown less noticeable, elevating software as a greater opportunity for delivering innovation. Cutting edge IoT software allows connected devices to capture, aggregate, automate, and draw actionable insights from today’s most strategic asset in an organization: data.
Further, the rapid transition to the 5G next generation mobile standard has led Cisco CEO, Chuck Robbins, to state that the company is singularly focused on winning the 5G race. Global internet traffic continues to multiply, highlighted by an explosion of data. By 2022, more data will be consumed than in all previous years combined, as superfast 5G becomes more ubiquitous.3 Consequently, as the number of devices connected to networks grows, Cisco’s products will play an ever-growing role in powering the IoT theme.
Semiconductors and Sensors: Skyworks
The number of IoT devices is expected to reach 75 billion by 2025, with each ‘thing’ containing specialty semiconductors to connect to 4G, 5G, Wifi, and other networks.4 And the share of chips in every-day devices continues to grow rapidly. For example, in the auto industry, a standard vehicle today has an average of just under $400 of semiconductors for electronics systems, while an electric car has about $2,000. With autonomous cars, the figure pushes up to about $15,000 worth of semiconductors.5 With decades of experience, Skyworks has consolidated as a premier supplier in the space, offering a variety of chips used in smart phones and other IoT devices such as fitness trackers, gaming consoles, avionics, satellites, vehicles, and biomedical devices, among other applications.
In the smartphone space, Skyworks supports top-tier mobile device manufacturers like Apple, Huawei and Samsung, which have relied on Skyworks’ chips for years. Looking forward, early 5G-capable devices will require greater radio frequency (RF) chip content than 4G ones, which Skyworks provides with their 5G-enabled Sky5 chip. According to Bloomberg Intelligence, the increase in the number of filters, tuners and antenna multiplexers in a 5G smartphone should drive the dollar content to about $25 a device vs. $18-$20 for a premium 4G phone, representing a 32% increase for the next-gen phones.6
Equipment, Vehicle and Infrastructure/Building Technology: Rockwell Automation
The IoT’s impact extends beyond consumer devices, with the rise of smart factories enabling systems to interact with one another, analyze data, predict failures, optimize output, and adapt to changes within the manufacturing process itself.7 Rockwell Automation is a key player in the smart factory space, as the firm is focused on developing industrial automation solutions for a broad range of industries. The firm designs and produces equipment and software that increases the speed, safety, efficiency, and productivity of manufacturing plants.
For Rockwell, the rise of the industrial IoT has been key in transforming the physical world into digital models. The powerful confluence of technologies between machines and big data, generated by connected sensors, ultimately allows for a reduction of bottlenecks and downtime, increases in throughput, and improvements in maintenance. All these benefits are expected to be enhanced by 5G networks through greater reliability and lower latency.
Conclusion
Leading companies in the IoT ecosystem are providing the technology and solutions to facilitate the monitoring, collection, and analysis of data from billions of devices. As new mobile standards like 5G are introduced and preferences evolve to demand smarter devices, we believe these companies and others in their fields are well positioned to benefit from the rise of the Internet of Things.
Related ETFs
- SNSR: The Global X Internet of Things ETF enables investors to access a potential high growth theme through companies at the leading edge of IoT, an approach which transcends classic sector, industry and geographic regions to target this emerging theme. In a single trade, SNSR delivers access to dozens of companies with high exposure to emerging IoT technology.
Connected Themes
- Robotics & AI, Cloud Computing, Health & Wellness, Autonomous & Electric Vehicles