Hang-ups about Huawei Technologies open a 5G line for Samsung Electronics. The Chinese telecommunications equipment manufacturer is running into mounting political problems overseas. That should help South Korea’s$280 billion titan make a move in the burgeoning market.
The stakes are huge. Mobile infrastructure is forecast to be at least a $25 billion market by 2022, with nearly half from major 5G networks, according to research outfit IHS. Huawei, ZTE, Stockholm-based Ericsson and Finland’sNokia accounted for over 90 percent of worldwide sales last year. And Huawei’s 28 percent share dwarfed Samsung’s 3 percent.
The Seoul-based conglomerate set a lofty target earlier this year to grab a fifth of the 5G market by 2020. For now, the networking business barely registers at Samsung. The unit generated only about 3 trillion won ($2.7 billion) of the company’s 240 trillion won of 2017 annual sales.
Convincing customers to switch will be challenging. With Chinese gear off limits, the likes of U.S. mobile carrier Verizon should welcome an alternative to Nokia and Ericsson. But it is generally costly and inefficient to swap out new equipment, especially when upgrading existing networks.
Samsung’s expertise and deep pockets should help. The company is making next-generation chipsets, smartphones and other gadgets; it also claims a share of essential 5G technology patents. It has the power to offer attractive prices too. Critics of Canberra’s decision to ban Huawei claim that similar kit from Nokia and Ericsson costs up to 30 percent more.
For evidence of Samsung’s ambition and stamina, consider its declaration last year that it would triple its market share in contract chip manufacturing within five years. California-based GlobalFoundries just dropped out of the costly race to produce next-generation 7 nanometer semiconductors, leaving TSMC to contend for the market against Samsung. The 5G path looks similarly clearer. – Reuters