Samsung to benefit from Huawei's trouble in US, Europe

Kim Young-ki, former head of Samsung Electronics' network business division, shows the firm's 5G network gear in a press conference at the tech firm's headquarters in Suwon, Gyeonggi Province, July 13. / Courtesy of Samsung Electronics

By Jun Ji-hye

Samsung Electronics will likely benefit from a series of moves by the United States and Europe to ban China's Huawei from building fifth-generation (5G) networks there, as the Korean company is seeking to establish a stronger presence in the global 5G equipment market, analysts said Friday.

With the United States having suspected that Huawei equipment might provide a backdoor for Chinese spying efforts, several governments, including Australia, Canada and Germany, have joined or are considering joining the move to exclude Huawei from their 5G networks.

The European Union is also considering proposals to exclude the Chinese firm from 5G networks for next-generation mobile networks, according to Reuters.

Korea Investment & Securities said Huawei took first place in the global telecommunications equipment market in 2017 with a 28 percent market share on the back of active support of the Chinese government and price competitiveness of the products.

“The United States' attack on Huawei has political intentions to block China's global strategy in the 5G industry,” said Choi Seol-hwa, an analyst from Korea Investment & Securities. “The conflict between the two countries is expected to drag out for long. This would lead to global economic slowdown, but is also bringing new opportunities, benefiting Korean companies.”

Choi continued, “Samsung Electronics' 5G equipment is more competitive compared to its 4G equipment. About 30 percent to 50 percent of sales of Huawei are created in the European market. If a vacancy is created in that market, Samsung is expected to fill that.”

Samsung Electronics is also expected to regain lost ground in the smartphone business, benefiting from Washington's move to ban the sale of U.S. chips and other components to Huawei and other Chinese telecom companies.

The Korean tech giant has been in a battle with Chinese firms for share in the stagnated global smartphone market.

The U.S. government is moving to impose sanctions against Huawei, claiming the firm tried to steal trade secrets from T-Mobile and worked to skirt U.S. sanctions on Iran.

The U.S. Justice Department filed criminal charges against Huawei at the end of last month.

Huawei has depended on U.S. suppliers including Micron Technology for memory chips and other components necessary to manufacture smartphones.

“If Huawei's supply chain were to be disrupted by an export ban from U.S.-domiciled companies, it would have a massive impact on Huawei, and it would certainly benefit Huawei's rivals,” Peter Richardson, director at global consultancy Counterpoint Research, was quoted as saying by Nikkei Asian Review. “Samsung would feel the relief of competitive pressure in Europe and the Middle East for sure.”