Business

Samsung’s network business looks to capitalize on Huawei’s troubles

Huawei has been having a rough time in the US and other western markets with mounting concerns of national security risks associated with its network equipment. The US government has turned increasingly vocal in its criticism of the Chinese company and has been actively pushing businesses to stop dealing with it.

A report in Reuters says Samsung, who is a direct competitor to Huawei in many of its businesses, is looking to take advantage of the situation to grow its network business. As part of these efforts, the Korean company has reportedly moved high-performing managers and employees from its mobile division to the network equipment business.

It appears potential customers are taking note of Samsung’s efforts as the company tries to position itself as a dominant player in the 5G network equipment business. Among those impressed with Samsung’s push in the 5G market is the CTO of the French telecom major, Orange, says the report. The French company, currently one of Huawei’s customers, will be running 5G tests with Samsung equipment this year.

“We’re bolstering our network business to seize market opportunities arising at a time when Huawei is the subject of warnings about security,” said a Samsung source to Reuters. With a drop in revenue from its mobile division and an uncertain growth trajectory for its semiconductor business, Samsung is planning to invest $22 billion in 5G, artificial intelligence, and other areas in three years.

Samsung currently holds only 3% of telecom infrastructure market

Samsung currently holds only 3% of the telecom infrastructure market, while Huawei’s share is around 28%. Though the South Korean company supplies to many major carriers, it is not the sole supplier. The company is already working with AT&T, Verizon, and Sprint in the US on 5G networks, but it is not certain it will emerge as the dominant 5G network gear supplier for these carriers.

Samsung’s major success in this space could actually come from India, where the company is in talks with Reliance Jio to upgrade its network to 5G. Given that Samsung is already a key supplier to Jio’s 4G network, any 5G upgrade moves from the carrier could work in Samsung’s favor.

The biggest hurdle for Samsung in its quest seems to be the dearth of software engineers in the home country. Analysts quoted in the report believe the Korean tech giant will hire 1,000-1,500 people for its 5G network business this year. The company has reportedly asked the South Korean government to assist in hiring high-level engineers when the country’s Prime Minister Lee Nak-Yeon visited the company in January.

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