After a flying start, Samsung struggles to gain ground in 5G

With an inside run in early 5G and a market gap as the US squeezed Huawei, 2019 looked like a breakthrough year for Samsung Networks.

That was certainly the view of Kim Young-ki, the head of Samsung Electronics' network business unit, who declared last May he expected to achieve 20% share of the 5G equipment by 2020.

It hasn't worked out like that.

According to research firm Dell'Oro, Samsung Networks improved its share of the telecom equipment market by one percentage point to 3% of the total market last year. Even more troubling for the RAN specialist, Dell'Oro estimates its share of the RAN market also improved by just one point. While the Dell’Oro Group confirmed that Samsung's 5G mobile equipment share is in the 10% to 20% range, the research firm also said Samsung's 5G RAN share was on a downward trend throughout 2019.

After a flying start to 5G in supplying all three South Korean operators, Samsung Networks has since struggled to gain ground. (See Samsung Pumps Up the Basestations in Korean 5G Market.)

The unit, a part of Samsung Electronics' IT and mobile division, doesn't break out its numbers.

But in its fourth-quarter results it acknowledged sales had slowed in its home market as 5G demand leveled. It said it expected international growth to offset further domestic contraction as "we expand our core competencies and invest in the infrastructure required for additional growth."

Some signs of that growth are evident, with recent contract wins at US Cellular and New Zealand's Spark. But these are not large players and it's not clear how much equipment Samsung will supply. (See Spark gives 5G RAN thumbs-up to Samsung.)

Despite Kim Young-ki's ambitious and public target, Samsung Networks has usually been conservative in setting expectations, says Daryl Schoolar, practice leader of Omdia's Intelligent Networks team.

"It was interested in markets where technology performance is just as important as price when it comes to competition," he said. For that reason, it has stayed out of the price-sensitive China market.

But to grow, the vendor will need to expand its operator customer base, Schoolar says.

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In North America, its prime offshore market, it is targeting smaller operators. It will likely receive an assist from its acquisition early this year of TeleWorld Solutions, which provides network design and optimization services for telcos – functions valued by smaller players, Schoolar points out.

Samsung is also eyeing the $1 billion the US government has set aside to encourage the telcos – most of them small – to rip and replace Huawei kit.

"This is an excellent time for the vendor to increase its attractiveness to those operators," Schoolar said.

But he said he was "disappointed" Samsung had been unable to gain market traction in Europe.

"If Samsung wants to grow in other regions, they will need to make similar purchases in those areas."

Samsung Networks did not respond to Light Reading's request for a comment.

— Robert Clark, contributing editor, special to Light Reading

iainmorris 3/18/2020 | 3:39:45 AM
Update The fourth paragraph of this story has been updated since it was first published to provide more detail and context about Samsung's position in the RAN and 5G RAN markets.
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