Credit Suisse picks 6 stocks to ride shift to 5G smartphones — and one has 40% upside

Published Thu, Sep 9 202110:30 PM EDTUpdated Thu, Sep 9 202110:30 PM EDT

Swiss investment bank Credit Suisse identified stocks in Asia it said would benefit as the smartphone industry recovers and the number of 5G mobile devices grows — including some shares with over 40% upside. 5G refers to the fifth generation of high-speed mobile internet that aims to provide faster data speeds and more bandwidth to carry growing levels of web traffic. New technologies like self-driving cars are underpinned by the rapid development and global deployment of 5G networks, but they are are still at a nascent stage. In a note dated Aug. 31, Credit Suisse pointed out growth of the smartphone market slowed in the second quarter due to fewer sales in China as well as the impact of the Covid-19 pandemic. The bank trimmed its estimates for the current quarter from 353 million smartphone units to 338 million but expects full-year growth of 7.6%. Credit Suisse maintained its forecast for 5G smartphone devices to grow from 255 million units in 2020 to 551 million this year. By 2023, that number is expected to climb to 900 million as the technology becomes widely available and affordable. Semiconductor companies "are the best way to play the 5G theme," Manish Nigam, head of Asia-Pacific technology research at Credit Suisse, told CNBC on Tuesday at a briefing. He explained that is likely because a bulk of the extra spending around 5G is going to semiconductor firms and the current chip shortage allows them to charge higher prices. In its Aug. 31 note, the investment bank highlighted 15 Asian stocks that could benefit from a transition to 5G in the smartphone market, with projected average earnings growth of 74% this year. The bank's top picks are: Taiwan Semiconductor Manufacturing Company : The smartphone business contributes around 40% to 50% of chip sales for the world's largest semiconductor foundry and is expected to see continued growth, according to Credit Suisse. The bank lifted TSMC's price target from 675 New Taiwan dollars ($24.46) to 700 New Taiwan dollars, pointing to 13% upside from Wednesday's