In the not too distant future, 5G networks will bring faster speeds, less latency, and more coverage to wireless consumers across the United States. 5G is shorthand for the fifth generation of mobile networks. It will be the next wireless standard implemented beyond the current 4G protocol most American wireless consumers enjoy today. The benefits will be immense and immediately recognizable. Data rates for 5G are expected to be 10 times faster than 4G and LTE systems, with download speeds as fast as 10Gbps (gigabits per second).

Illustration showing the connectivity o fthe internet of things from medical devices to traffic signals to farm equipment

5G will connect the internet of things at speeds 10 times faster than 4G. Image source: Verizon Communications Inc.

For a little perspective of how significant this upgrade is, consider this example provided by Skyworks Solutions Inc (SWKS -2.38%) CEO Liam Griffin: With the 3G system, it took one day to download a full-length HD movie. This same file on a 4G network could be downloaded in minutes. On a 5G network, it would be a matter of seconds before the same movie was downloaded.

Of course, a great deal of work remains to be completed before this new technology becomes reality, but much progress has already been made. Last July, the FCC passed a series of rules that laid the foundation for the advancement of 5G in the United States. These rules gave the telecom networks and tech giants the framework needed to experiment with the available spectrum to see what works best.

Since the nationwide 5G network is a coming reality, investors would do well to consider which companies might stand to benefit the most in this massive shift in mobile networks. Here are three companies that are leaders in their respective markets and that are especially optimistic about their opportunities as 5G implementation moves closer. Collectively, they cover a wide variety of sectors and industries, and some might be more obvious than others. But together, this telecom giant, semiconductor manufacturer, and specialty glass maker might represent some of the best investments in the race to 5G.

The nation's best wireless network wants to get better

Verizon Communications Inc (VZ -0.91%) is committed to being the first telecommunication company to deploy a 5G network. In the company's 2016 second-quarter conference call, CEO Lowell McAdams stated he learned from Verizon's experience with 4G LTE that "being a first mover in developing the technology and nurturing the ecosystem is the best way to ensure that our customers benefit from its capabilities."

Beyond the obvious benefits of being the first to upgrade its network, 5G would also substantially lower Verizon's Fios costs. Fios by Verizon is the company's effort to bring the advantages of fiber optics straight to the end consumer. In the same conference call, McAdams stated:

I think of 5G initially as, in effect, Wireless fiber, which is Wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer. With Wireless fiber, the so called last mile can be a virtual connection, dramatically changing our cost structure.

With the premium pricing inherent to being the first to deploy a 5G network coupled with serious cost-saving benefits, the real question becomes whether Verizon will actually be the first to deploy a 5G network. On that front, CFO Matthew Ellis had encouraging news for investors during the company's most recently reported conference call:

5G wireless technology is a focus for us. We are now launching about 10 precommercial pilots across the country with multiple use cases, including dense urban and suburban neighborhoods. Our goal is to test the 5G fixed wireless technology in different environments in order to successfully operationalize 5G products for a commercial launch.

The chip maker connecting devices to the network

Skyworks Solutions manufactures analog semiconductor products that enable smartphones, IOT devices, wearables, smart home devices, and a host of other products to connect to Wi-Fi or wireless networks. While mostly known as an iPhone supplier, the company is beginning to grow beyond Apple.

CEO Liam Griffin is certainly excited about the company's prospects for growth related to 5G. In Skyworks' 2017 first-quarter conference call, Griffin stated the company's expertise, scale, and customer relationships were positioning Skyworks for "5G leadership." Later, Griffin added, "5G represents a massive growth opportunity for our industry and certainly for Skyworks."

Why the sudden optimism? Precise filtering is increasingly important in wireless communications. Among the feathers in Skyworks' cap is they are one of the largest manufacturers of TC-SAW filters, which stands for temperature-compensated-surface acoustic wave filters. This is a quality, low-cost alternative to the more expensive BAW (bulk acoustic wave) filters, which some of Skyworks' competitors make.

Traditionally, SAW filters work well on lower frequencies, but not higher ones. However, certain technical design choices (TDD v. FDD, if you're a networking geek) in the evolving 5G standard might open the door for Skyworks' cheaper filters to work at higher frequencies as well. This positions Skyworks to capture more market share in 5G-capable connected devices than previously would have been possible.

Upon the news that Skyworks Solutions could play a larger part in 5G devices, shares spiked and are up more than 18% year to date.

SWKS Chart

SWKS data by YCharts.

The glass manufacturer supplying the backbone of 5G

It has been almost 50 years since Corning Inc (GLW -1.26%) invented the first low-loss optical fiber that could transmit data as light. Since that historic day in 1970, optical fiber has become the backbone of network infrastructure. While Corning is probably best known for outfitting LCD televisions with glass screens, its second-largest division is still manufacturing optical fiber.

In Corning's most recently reported quarter, earnings from its optical communications segment were up a dazzling 85% year over year. The higher profitability was driven by improved manufacturing costs and the selling of their "solution products" in this area. 

A woman with a cell phone surrounded by abstract images depicting wireless connectivity.

Image source: Getty Images.

In the conference call, CFO Tony Tripeny said the company expected strong growth in this division to continue, projecting for "at least 25%" growth in the current quarter. Tripeny also stated Corning was prepared to "leverage the strong growth opportunities" it sees in the telecom market as the industry leaders looked to invest in "next generations and network capabilities".

It is no coincidence that Corning's stock price has skyrocketed the past year as this division has grown. A year ago, Corning's shares traded for about $18. Currently, shares are trading around $26.75, highs the stock price hasn't seen since before the Great Recession.

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