What’s at Stake as Samsung Launches Its 5G Testbed?

Samsung (SSNLF) and AT&T (T) have teamed up to explore industrial use cases of 5G (fifth-generation) technology. As part of this program, the companies have set up a 5G testbed at Samsung’s fabrication facility in Texas. 5G connectivity is expected to help emerging technologies such as autonomous driving, remote surgery, and virtual reality to quickly become mainstream applications.

As they embark on exploring industrial applications of 5G technology, Samsung and AT&T hope that their efforts will pave the way for deeper industrial automation, leading to benefits such as lower costs and improved productivity for manufacturers.

The efforts Samsung and AT&T are making in exploring 5G applications in an industrial setting come down to the pursuit of IoT (Internet of Things) dollars. Global spending on industrial IoT systems was $145.8 billion in 2017, according to Zion Market Research. The industrial IoT market is expanding at a rate of 8.1% annually and is expected to grow to $232.2 billion by 2023.

The broader adoption of industrial IoT due to 5G connectivity could enlarge the addressable market for memory chips and sensor makers such as Samsung and Sony. Network operators such as AT&T are also banking on 5G technology to expand their markets—by allowing them to sell more services to enterprise customers, for example.

AT&T is currently in the process of building a 5G network, which it hopes to activate in up to a dozen US metropolitan markets before the year’s end. Verizon (VZ) launched its 5G residential service early this month and is now eyeing the enterprise market. T-Mobile (TMUS) and Sprint (S) are working toward launching 5G services starting in 2019.