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5G and AI could disrupt our lives in unimaginable ways

When Mount Tambora erupted in 1815, the ash blacked out the sun. Temperatures fell across the globe. Food prices soared. Horses starved and were put down. There was a transportation crisis. So, Karl von Drais invented the Laufmachine. It was supposed to be faster than a trotting horse and it was at the time, an incredible innovation. Today, we call this device, the bicycle¹.
Disruptive technology often appears in a crisis. This is the case even two centuries later, as the world finds itself in the grips of one of the worst pandemics in more than a hundred years. Yet, two technologies offer hope: 5G and artificial intelligence (AI). Both helped improve diagnosing, monitoring and tracking the Coronavirus from the beginning. Chinese company Baidu* for instance, used its RNA prediction algorithm to significantly accelerate the prediction time of the Covid-19 virus’s RNA secondary structure, from 55 minutes to 27 seconds, giving front-line researchers the opportunity to better understand the virus². Meanwhile, 5G robots assisted in checking body temperatures in China because it proved faster and safer than doing it manually. Automated disinfection robots were also used to disinfect areas of between 20,000 to 36,000 sqm in just one hour autonomously, reducing the need for people to carry out this work and to potentially expose themselves to Covid-19³ . However, the longer-term consequences are far more interesting. Together, these technologies could increase economic productivity to previously unimaginable levels. Consequently, it could put an end to sluggish economic growth as the world enters a new digital age.

5G and AI is set to dramatically improve our lives

Imagine this! You’re having a meal with friends and you’ve had a couple of glasses of wine. Afterwards, you get into your car, tap your address into the GPS and hit autopilot. Your car then drives you home, while you close your eyes and relax. Ten years ago, this would have seemed like science fiction. Yet today, we are close to turning this into reality. Companies such as Tesla*, already offer basic autonomous driving in their electric vehicles. In the next 10-15 years we could see a completely autonomous service as standard in all cars. For this to work, however, requires both 5G connectivity and the processing ability of AI. Drink driving could become a thing of the past. Human errors could be eliminated from the roads. Lives can be saved! However, it is not just about self-driving vehicles.

Industry and manufacturing In factories, 5G sensors could provide real-time data that allow AI algorithms to pinpoint bottlenecks and inefficiencies in supply chains. AI could provide cognitive automation by sifting through data that supply chain professionals would normally struggle to make sense of. It could lead to automated decision-making and increased profitability for manufacturers4 .

Healthcare 5G and AI algorithms could also be used to diagnose and treat patients more effectively. This this goes well beyond fighting the Coronavirus. Wearable tech connected to a 5G network could be used to collect data that an algorithm could use to detect diseases long before symptoms are visible. It could prove a lifesaver in the fight against illnesses such as cancer.

 

5G and AI support each other

These two technologies will benefit each other. 5G is expected to provide the infrastructure and the massive amounts of data that AI requires. Meanwhile, AI provides the ability to make sense of the complexity of our 5G networks and make them more efficient. Both technologies are therefore needed to support a future ‘internet of things’ which by 2025, is expected to support more than 41.6 billion devices⁷. These technologies will usher in brand-new internet technologies. For instance, augmented and virtual reality (AR and VR) could become part of daily life. Although versions of these technologies are now being slowly introduced to smartphones today, 5G and AI could allow massive advances in these technologies.

5G will enhance AI The true scale of this disruption is difficult to comprehend. 5G will offer faster processing speeds, lower latency (shorter delays) and higher bandwidth (faster internet). AI chips embedded in 5G connected devices will process data at source and will also connect to the cloud for greater resources. The result will be breath-taking computational speed as AI edge computing and cloud services combine seamlessly8.

AI will also enhance 5G Meanwhile, AI will help make 5G even better. It will help enhance service quality by ensuring that tower and 5G infrastructure is built optimally. This will ensure that the coverage provided reflects the behaviour and usage on the network almost perfectly. AI may also be used to control congestion on the network and use resources optimally. Finally, it could enhance network security by being able to analyse massive quantities of data quickly to detect threats and defend the network itself9.

The 5G and AI revolution

Although it is still early on, there are many companies that are enabling 5G development. Crown Castle* in the US is building 5G towers that US cellular carriers need. Marvell Technology* provides key networking chips and solutions used in 5G telecom infrastructure and data centers. Further afield, you have companies such as Broadcom* , which manufacture chipsets for 5G devices. The company already sells wireless parts to a number of smartphone manufacturers, including Apple* . It is fair to say, that in the future, most sectors and companies will be affected positively by 5G and AI. Therefore, patient investors will be rewarded for actively investing in companies that already have a sound business model and strong fundamentals to support it. These companies will likely benefit from the 5G and AI revolution, regardless of which industries they sit in.

Reshaping our global economy and beyond

New industries will emerge. New jobs will be created. The way we live our lives today will be radically different. What is intriguing is that these two technologies will need each other. There is a positive feedback loop between them: 5G enhances AI, and then AI enhances 5G and so on. It is this combination that makes them so explosively powerful. Although we currently live in an era of low economic growth and falling productivity, both these technologies could reverse this trend, delivering high levels of growth and altering our lives forever

Allianz Global Artificial Intelligence

Artificial intelligence has been transforming our lives and disrupting industries for years and yet we are only at the beginning of this vast scope of opportunity. Our Allianz Global Artificial Intelligence fund offers investors global and diversified exposure to the Artificial Intelligence theme. It is not built to be a technology fund. The fund invests across the full market capitalisation. However, our focus is on on mid-cap and large-cap instead of primarily on mega-cap companies. Most importantly, we are investing along the full value chain from technology companies that develop infrastructure and enable the application of AI, to the companies across many sectors and industries adopting AI in their products, solutions and business processes. Artificial Intelligence will disrupt every industry in future and so offers plenty of diverse investment opportunities for those with the right knowledge and expertise.
Our portfolio management team is based in San Francisco, providing them unique access to many of the key players in this space. This results in a continuous dialogue with both established players and start-ups, plus a better understanding of how AI is developing and proliferating. In addition, the Allianz Global Investors Global Research platform provides a global, cross-sector perspective. With a comprehensive understanding of the underlying technology and businesses, our team is best placed to understand the opportunities that Artificial Intelligence presents for all areas of the global economy.

Sources:
¹ T. Standage, “The Economist 1843: Stories of an extraordinary world,” The Economist, June/July 2020. [Online]. Available: https://www.1843magazine. com/design/rewind/why-global-crises-are-the-mother-of-invention. [Accessed 02 July 2020].
² https://syncedreview.com/2020/02/04/baidu-open-sources-rna-prediction-algorithm-for-2019-novel-coronavirus/ [Accessed 4th July 2020]
³ S. Weekes, “How 5G-powered robots are helping China fight coronavirus,” Smart Cities World, 26 March 2020. [Online]. Available: https://www. smartcitiesworld.net/news/news/how-5g-powered-robots-are-helping-china-fight-coronavirus-5154. [Accessed 04 July 2020].
⁴ J. McKendrick, “Artificial intelligence works its way into supply chains,” ZDNet, 24 January 2020. [Online]. Available: https://www.zdnet.com/article/ artificial-intelligence-works-its-way-into-supply-chains/. [Accessed 5 July 2020].
⁵ S. Carey, “How Tesco is using AI to stock shelves, route drivers and order groceries with Google Assistant,” Computerworld, 10 May 2017. [Online]. Available: https://www.computerworld.com/article/3427422/how-tesco-is-using-ai-to-stock-shelves--route-drivers-and-order-groceries-with-googleassistant.html. [Accessed 5 July 2020].
⁶ L. Thomas, “Amazon to open its first full-size, cashierless grocery store,” NBC News, 25 February 2020. [Online]. Available: https://www.nbcnews.com/ tech/tech-news/amazon-opens-its-first-full-size-cashierless-grocery-store-n1142351. [Accessed 07 July 2020].
⁷ Thales Group, “Using artificial intelligence to shape 5G,” 2 February 2020. [Online]. Available: https://www.thalesgroup.com/en/markets/digitalidentity-and-security/mobile/magazine/using-artificial-intelligence-shape-5g.
⁸ “5G, AI, and the Coming Mobile Revolution,” [Online]. Available: https://www.micron.com/insight/5g-ai-and-the-coming-mobile-revolution.
⁹ Qualcomm Technologies, “Making 5G NR a reality: Leading the technology inventions for a unifi ed, more capable 5G air interface,” Qualcomm, San Diago, 2016.
¹⁰ https://www.venturescanner.com/2020/03/12/ai-2019-funding-achieved-banner-year/
¹¹ https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html

Important information:
* This is no recommendation or solicitation to buy or sell any particular security. A security mentioned as example above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.

Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. Allianz Global Artificial Intelligence is a sub-fund of Allianz Global Investors Fund SICAV, an open-ended investment company with variable share capital organised under the laws of Luxembourg. The value of the units/shares which belong to the Unit/Share Classes of the Sub-Fund that are not denominated in the base currency may be subject to a strongly increased volatility. The volatility of other Unit/Share Classes may be different. Past performance is not a reliable indicator of future results. Investment funds may not be available for sale in all jurisdictions or to certain categories of investors. This is no recommendation or solicitation to buy or sell any particular security.

For professional investors in Europe (excluding Switzerland)
For a free copy of the sales prospectus, incorporation documents, daily fund prices, key investor information, latest annual and semi-annual financial reports, contact the issuer at the address indicated below or www.allianzgi-regulatory.eu. Austrian investors may also contact the Austrian information agent Allianz Investmentbank AG, Hietzinger Kai 101-105, A-1130 Vienna. Please read these documents, which are solely binding, carefully before investing. This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established branches in the United Kingdom, France, Italy, Spain, Luxembourg, Sweden, Belgium and the Netherlands. Contact details and information on the local regulation are available here (www.allianzgi.com/Info).

For qualified investors in Switzerland
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