Last month, the Trump administration added Chinese tech giant Huawei to its “entity list.”

The list is basically a blacklist of foreign companies. It bans them from doing business with U.S. firms.

President Trump issued the order after declaring the company a national security threat. (The U.S. has accused Huawei of stealing technology from American tech firms.)

It’s his latest salvo against China in the ever-escalating trade war. But it’s one that could prove beneficial for Western tech companies, too.

And in today’s essay, I’ll tell you about two companies that one Silicon Valley insider predicts will benefit most from Huawei’s blacklisting…

But first…

The Great Tech Buildout

Huawei makes telecommunications equipment and consumer electronics—including smartphones. It’s also a leader in 5G wireless technology.

If you don’t know already, wireless technology encompasses all devices and equipment allowing you to transmit data over air rather than wires.

And 5G is the next generation of wireless tech. It’s 1,000 times faster than current 4G technology. For example, an HD movie that takes an hour to download with 4G tech will download in just seconds with 5G.

So this industry will be huge. One study even forecasts the market will be worth $1.23 trillion by 2026.

But here’s the thing…

5G data transmissions run on a different radio spectrum than 4G. We need an entirely new network infrastructure to transmit data across 5G.

And Huawei is a major player in this buildout. It already has 40 commercial contracts in Africa, Asia, and Europe.

This brings me to Silicon Valley insider and longtime PBRG friend Jeff Brown—one of the foremost experts in 5G technology investing…

A New Arms Race

Jeff is one of the smartest guys on the planet when it comes to identifying groundbreaking tech trends—and how to profit from them.

For over two decades, he’s worked in Asia and Silicon Valley at the executive level for some of the hottest tech companies in the world…

You see, in 2005, he was head of the global strategy division at wireless semiconductor giant Qualcomm. Since his time with the company, shares more than doubled.

And in 2016, he pounded the table on chipmaker Nvidia. It went on to be the best-performing S&P 500 stock of the year—beating 499 other companies and returning more than 300% to shareholders.

Now, Jeff isn’t a newcomer to the 5G space… He’s been following the trend for years.

And he believes the Trump administration blacklisted Huawei because its networks could give China a back door to spy on Western democracies.

Here’s Jeff:

Huawei was installing spyware on its internet routers. It was watching data traffic in Western democracies.

Without getting too far into the weeds, Huawei’s networking equipment was routing all internet traffic from Western nations to China.

So let’s say that traffic was intended to go from the U.S. to Israel. Well, rather than going directly to Israel, it would go from the U.S. to China—and then to Israel. This allowed the Chinese to capture and analyze all that traffic.

Huawei is an important part of China’s ambitious plan to dominate emerging technologies like 5G. That’s why President Trump acted.

He won’t let China undercut U.S. companies by selling cheap products using stolen technology. This tech arms race is too important.

And Jeff predicts this directive will be a boon for two companies…

And the Winners Are…

Here’s what Jeff recently told his readers:

The trade negotiations and ban on Huawei will have a negative impact on the rollout of 5G networks in mainland China. U.S. companies have historically provided key components—both hardware and software—to companies like Huawei.

If they can no longer purchase those components, once they run out of inventory, it’ll create a problem. And that may very well be an intentional tactic that the current administration is using in its trade negotiations in order to put a fair agreement in place.

I do believe the Trump administration will stand firm on this. The U.S. economy is so strong right now, and the country doesn’t have any shortage of access to products and services domestically or with other trading partners. That’s a great position to negotiate from.

Here’s why…

Jeff says Huawei has nearly $100 billion worth of 5G contracts. But now that it’s on the blacklist, many of those contracts could be up for grabs.

And the only other two companies in the world capable of building 5G networks are Ericsson and Nokia. Both are large-cap companies trading on U.S. exchanges.

President Trump will continue to tighten the screws on Huawei to force the Chinese to capitulate on trade. While we don’t know how that’ll turn out… we do know Huawei’s rivals—and their investors—will benefit.

And remember, always do your homework before investing in any company.

Regards,

Nick Rokke
Analyst, The Palm Beach Daily

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Sincerely yours Palm Beach Reseach Group