At Mobile World Congress (MWC) 2019 in Los Angeles, chip designer NVIDIA (NASDAQ: NVDA) unveiled its plans to power 5G mobile networks with its new edge chips and artificial intelligence software. NVIDIA has a history of leveraging the power of its graphics processing units for new technology, and telecoms' work on new 5G standards is one area of particular promise.
As if to prove NVIDIA's point, Verizon (NYSE: VZ) and tech manufacturer Corning (NYSE: GLW) announced a few days later that 5G has been installed in Corning's fiber optic cable factory in North Carolina. It's one of the world's largest facilities producing fiber optics hardware -- Corning's fiber optic cable also being a key ingredient in the deployment of Verizon's 5G -- so this is more than a trial run with an unproven concept. Verizon and Corning plan to showcase how 5G can power the factory of the 21st century.
Mobile networks learn new tricks
Verizon and Corning plan to utilize 5G to power automation and quality assurance at the facility, capabilities that NVIDIA highlighted as new possibilities with 5G just days earlier. Because the new mobile network is up to 1,000 times faster and has a tenth of the latency (the time it takes for the network to respond to a user action) than the current 4G standard, it can be used to power new wireless technologies. According to the press release:
"Engineers from Verizon and Corning will explore how the factory of the future can use 5G to dramatically speed data collection, allow machines to communicate with each other in near real time, and wirelessly track and inspect inventory using 5G-connected cameras. They'll also test how 5G can improve the function of autonomous guided vehicles (AGVs) by helping them move more efficiently around the factory floor."
Verizon and other telecoms have found it difficult to deploy 5G for everyday use. There is a trade-off between speed and coverage, with distance and walls specifically presenting challenges to extending service coverage. A localized network within a facility without the physical obstructions a city has is an optimal place to deploy 5G, though. Besides, while it may sound exciting to be able to download a movie in a couple minutes or stream multiplayer video games via a wireless network, 5G isn't simply about speeding up data connection speed for you and me. It's about bringing the power of mobility to new use cases.
More than just speed
One of the capabilities that NVIDIA CEO Jensen Huang talked about at MWC was the concept of network slicing. Telecom operators will be able to allocate 5G network infrastructure for multiple uses, not just consumer voice and data like 4G. The company thinks that its GPUs will be able to handle all of the extra traffic, helping companies like Verizon allocate some of its hardware to handle consumer voice and data along with business traffic like AI software, video monitoring, and factory operations. It thrusts telecom companies into a new arena that pits them against more traditional internet service providers.
Verizon and Corning didn't provide details on the specific hardware they're using 5G in in the fiber optic factory, but this purpose-built operation is surely what all companies involved with the new mobile internet standard (including NVIDIA) had in mind when investing in its development. 5G is less about the consumer (although the masses will get access to it someday) and more about enterprise use. Verizon's financial results are dominated by smartphone connections these days, but that should change in the years ahead. For now, though, some of the biggest beneficiaries of the movement -- from an investment standpoint, anyway -- could be the hardware companies like NVIDIA and Corning helping to build the new network.
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Nicholas Rossolillo and his clients own shares of NVIDIA and Verizon Communications. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool recommends Corning and Verizon Communications. The Motley Fool has a disclosure policy.