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Samsung tipped to up ante in network equipment market on 5G boom: analysts

All News 15:23 December 11, 2019

By Joo Kyung-don

SEOUL, Dec. 11 (Yonhap) -- Samsung Electronics Co. is likely to see its presence in the global network equipment market rise sharply next year as major telecommunication service operators are set to make massive investments in 5G network infrastructure, analysts here said Wednesday.

Samsung's share in the global mobile network equipment market stood at 11 percent this year, more than double from its presence in 2018 when it accounted for only 5 percent of the market, according to recent data from market tracker IHS Markit.

Local analysts expect that Samsung's market share may reach above the 20 percent level next year since telecom companies are fast moving toward 5G, a sector in which the South Korean tech giant has been keeping a competitive edge.

When it comes to the global 5G network equipment market, Samsung was the No. 2 player with a 23 percent share as of the third quarter, which was only behind Chinese rival Huawei Technologies Co. with a 30 percent share, IHS Markit data showed.

But since Huawei is facing political headwinds amid the U.S.-China trade war, analysts said Samsung sits in a good position to narrow the gap.

"With 5G infrastructure investment expanding globally, it's positive that Samsung will expand its share in the global network equipment market," Park Jong-sun, an analyst at Eugene Investment & Securities Co., said. "In 2020, Samsung's mobile network equipment business is expected to see big sales growth."

Park said Samsung's network business division is projected to log 6.3 trillion won (US$5.2 billion) in sales this year, up 53 percent from a year ago.

This photo provided by Samsung Electronics Co. shows the company's new 5G access unit that supports 28GHz spectrum. (PHOTO NOT FOR SALE) (Yonhap)

According to Global System for Mobile Communication (GSMC), a trade body representing mobile network operators, there were 4.85 million 5G service subscribers globally as of September, but the figure is expected to reach 10.4 million by the end of the year and 76.8 million in 2020.

This means telecommunication firms need to expand their capital expenditure to catch up to the fast-growing demand for 5G mobile services.

Samsung has already been selected as a main vendor to major telecommunication firms in the United States and Japan.

In the U.S., some 327 trillion won in investment is expected for the 5G infrastructure market, and Samsung has already been selected as a main 5G equipment supplier for mobile service operators like AT&T and Sprint.

Samsung was also selected as the 5G equipment vendor to Japan's telecom giant KDDI Corp. and is expected to deliver 2.3 trillion won worth of 5G equipment. In Japan, some 32.5 trillion won is expected to go into 5G infrastructure over the next five years.

"It's estimated that next year's capital expenditures of U.S. and Japanese telecommunication firms are to expand at least 20 percent from this year," Kim Hong-sik, an analyst at Hana Financial Investment Co., said. "Three major mobile carriers in South Korea are expected to make similar 5G facility investments next year, which will be around 8 trillion won."

kdon@yna.co.kr
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