Verizon wants Samsung to exclude Chinese components from $6.6B deal

Samsung announced last month that it had secured a major contract from Verizon. It would be supplying network equipment to the largest mobile carrier in the United States. The $6.6 billion deal was a major win for the company’s networks division as it capitalizes on Huawei’s absence from the market.

Huawei has been locked out of the US market and due to the country’s concerns regarding its practices, it appears that companies don’t want non-Chinese suppliers to utilize even components that were made in China. Verizon has reportedly made such a request to Samsung.

Verizon doesn’t want Chinese components in Samsung’s equipment

Korean media reports that Verizon has request Samsung Networks to exclude Chinese-made parts from the equipment supplied under this $6.6 billion deal. Samsung has been sourcing the PCBs for the network equipment from suppliers in China.

ISU Petasys, a Korean manufacturer of PCBs, is looking to enter Samsung’s supply chain for network equipment. The company has reportedly provided samples to Samsung that were produced at its Daegu plant in South Korea.

Petasys is already a well-established manufacturer of PCBs for communication equipment. Its existing customers include the likes of Cisco and Juniper. Industry insiders do claim that since order volume for Samsung’s communication equipment components is relatively small compared to other products, it’s difficult for domestic PCB suppliers to turn a profit.

With Samsung’s $6.6 billion deal with Verizon hinging on this contingency, the company will certainly find a way to make the arrangement worthwhile for its suppliers.

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