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This is the year of 5G, and these chip stocks will be the winners, says BofA

Bank of America named several U.S. chip stocks that will ride higher on the back of 5G, a technology the bank sees booming in 2021.

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Several semiconductor stocks are set to benefit from what Bank of America says will be a big trend as countries recover from the pandemic: 5G.

Semiconductors, or chips, are vital components of smartphones and are also part of the infrastructure necessary for 5G technology — the next generation of mobile internet, with extra-fast download and upload speeds.

“5G could be the ultimate ‘reopening’ theme, as consumers venture out and demand faster cellular broadband coverage and capacity versus last year’s dependence on Wi-Fi,” the bank’s analysts, led by Vivek Arya, wrote in a note published Wednesday. Only around 20% of smartphones had 5G technology last year, but that is set to increase to 40% in 2021, the bank estimated.

It comes as major economies emerge from the coronavirus pandemic facing a major shortage of semiconductors, which is hurting a host of businesses.

Given that backdrop, Bank of America identified some favorite semiconductor stock picks.

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