SEOUL – As the United States and its allies block Chinese national champion Huawei from their 5G rollouts, South Korean rival Samsung Electronics’ is poised to fill the technological gap.
5G telecommunication technology promises to open vast new fields and businesses in what some predict will usher in a new industrial revolution, enabling autonomous driving, internet-of-things for industrial applications and ultra-fast uploads for digital media.
While some analysts see an emerging Samsung versus Huawei battle for 5G supremacy, industry experts say the South Korean tech giant will have difficulty catching up with Huawei in the short-term.
That, they say, owes to the nature of the mobile telecommunication equipment market and because Samsung’s core competencies are in memory chips and smartphones, not base stations and related 5G gear.
Still, if Washington’s unprecedented assault on Huawei persists beyond the US’ upcoming presidential election, Samsung’s 5G outlook will look rosier in the long term.
To be sure, it is not the sole beneficiary of Washington’s ostracism of Huawei: The same geopolitical factors that favor Samsung will also offer a helping hand to its northern European rivals, namely Ericson and Nokia.
Meanwhile, even though 5G is still in its infancy, and its potential is far from fully understood, it is not the be-all and end-all technological standard.
In lockstep with South Korea’s tech-friendly national government, capital-rich Samsung is already peering over the 5G horizon, as the two parties conduct preliminary research into 6G – the next-gen mobile communications standard that could go commercial as early as 2028.
Samsung and Huawei are currently the only two firms that provide total end-to-end 5G solutions, comprised of chipsets, base stations, virtualized solutions and the smartphones that run over 5G networks.
However, for Samsung, telecommunications network equipment as supplied to network carriers has customarily been a minor part of its business compared to memory chips and mobile phones – two sectors where it is a world leader.
Therein, analysts say, lies Samsung’s dilemma. While the company’s technological prowess in the sector is unquestioned, telecommunication service providers prefer to upgrade to 5G networks using gear manufactured by their current 4G mobile network suppliers.
Most telcos have long-term equipment supply contracts with trusted equipment manufacturing partners.
“The telecommunication equipment market is a B2B [business to business] market where transactions are made under a long-term supply contract with a three- to a five-year term,” an industry source told Asia Times. “Mutual trust between equipment manufacturers and telecommunication businesses is critical. Making new supply contracts is not easy.”
“Huawei has both technological prowess and price competitiveness of equipment,” the source added. “Although Samsung may be able to narrow its gap, it will be difficult to catch up with Huawei within a short period.”
Even so, Samsung has demonstrated the reliability of its 5G equipment in its home market, South Korea, where 5G services were commercialized for the first time in the world last April.
Inevitably, Samsung smartphones were the only device capable of running over the 5G network at the time of its launch.
Beyond South Korea, Samsung provides 5G network gear to Verizon, Sprint, AT&T and US Cellular in the US. Canadian network carriers Telus and Videotron, Spark of New Zealand and KDDI of Japan also use Samsung-made 5G network equipment.
This suggests Samsung is pushing more aggressively into the 5G market than it did for previous-generation network equipment markets.
“Samsung’s market share in telecommunication equipment could rise more than that of the 4G era,” Kim Jong-ki, a researcher at the Korea Institute for Industrial Economics and Trade, told Asia Times. “Samsung’s technological competitiveness is considered to be world-class.”
Stability, durability and timely supply of equipment are all key competitive factors in the 5G market. “Samsung is capable to meet all those needs,” he said.
Still, Samsung is not yet a top-three player globally. Market research firm Dell’Oro found that Samsung’s global market share of 5G mobile telecommunication equipment in the first quarter of this year was 13.2%, up nearly 3% from the previous quarter’s 10.4%.
Huawei topped the global list at 35.7%, followed by Sweden’s Ericsson with 24.6% and Finland’s Nokia with 15.8%, according to Dell’Oro’s research.
But even as Samsung closes the gap, geopolitical factors impacting Huawei will advantage Ericsson and Nokia as much as they do Samsung. The US government has alleged that Huawei’s 5G equipment has hidden backdoors that allow for spying and possible espionage, charges the Chinese company has denied.
Countries in the so-called “Five Eyes” intelligence alliance, namely the US, United Kingdom, Australia, New Zealand and Canada, have all decided against using Huawei equipment in their 5G networks, opening the way for Ericsson, Nokia and Samsung in some of the world’s most lucrative markets.
Indeed, Canada’s primary mobile carrier Telus decided to buy Samsung 5G gear in June. It will also procure equipment from Ericsson and Nokia. New Zealand’s largest mobile carrier, Spark, signed 5G contracts with multiple suppliers, including Samsung, in March.
Still, Samsung’s global 5G ambitions will face structural limits. That’s because 5G services are generally built on existing 4G services rather than being designed as standalone networks. In short, this means that both 4G and 5G users can use their devices over the combined networks.
5G phone users can enjoy 5G services where services are provided, and revert to 4G networks in spots where 5G coverage is not available.
“Samsung has a reputation for technological excellence in the telecommunication equipment sector and other sectors such as semiconductor and mobile phone sectors, but it is not easy to increase its current market share rapidly,” Kim of KIET said.
If a network provider is using 4G equipment produced by Huawei, Ericsson or Nokia, “it is advantageous to use their 5G equipment,” he added.
“If the 4G equipment and 5G equipment suppliers are the same, there is an advantage in compatibility,” said a telecommunications gear developer who requested anonymity. “It’s possible to make compatible 4G gear and 5G gear manufactured by different providers. But it takes time and cost to ensure smooth compatibility between both.”
It’s not an insurmountable hurdle: Sourcing 5G equipment from multiple vendors, rather than relying upon a single supplier, is standard industry practice, executives say.
“We’ve consistently said our approach to 5G would be multi-vendor. A key reason for this is that 5G technology is still emerging and is likely to develop significantly in the next few years, so a mix of vendors makes sense,” Rajesh Singh, Spark’s general manager of value management, said.
As such, many industry watchers expect Samsung to surge when standalone 5G services enter into full swing. Standalone 5G services are considered the ultimate in 5G, as they offer lower latency, or the delay before a transfer of data begins following an instruction for its transfer, and higher speeds. Building up standalone service networks will take time and big money.
“Providing standalone 5G service requires huge investments,” said an official with a South Korean network provider who requested anonymity.
“Standalone 5G gear normally uses the 28GHz frequency while non-standalone gear uses around 3.5GHz. Network carriers should install entirely new equipment for standalone services, and more standalone gear is needed in cities” in order to overcome signal blockages.
But in what is still a nascent market, it is not clear how valuable the standalone 5G market will be, nor exactly what shape it will take.
Meanwhile, even as the world is just starting to come to grips with the implications of 5G, early moves are already being made for the next big thing: 6G.
The South Korean government started a preliminary feasibility study for a 6G core technology development project in 2018, and finalized plans to develop core technologies with an initial investment of 200 billion won (US$168 million) for five years from 2021.
It will set up a second-stage investment plan to support commercialization at a date to be decided.
On August 6, Seoul unveiled that it aims to roll out 6G nationwide services in a world first, as was the case with 5G last April. Last May, Samsung founded a communication research center to accelerate research into 6G, and released a white paper this July titled, “The Next Hyper-Connected Experience for All”.
Samsung says 6G will have a latency of 0.1 microseconds compared to 1 microsecond for 5G and 10 microseconds for 4G. It has said 6G transmission speeds will be 50 times faster than those of 5G.
That, in turn, will enable long-distance real-time remote surgery, smart cities and totally autonomously driven vehicles. It will also enable advanced services such as truly immersive extended reality (XR) and high-fidelity mobile holograms, among other futuristic combined real-and-virtual applications.
Samsung forecasts initial 6G commercialization will start at the earliest in 2028, with mass commercialization following in 2030. But South Korea may not have much of a first-mover advantage as the quiet race for 6G is already well underway.
According to Seoul’s Ministry of Science and ICT, the US launched a 6G research institute in 2017. Finland started related research in 2018, while China began in November 2019.
“While 5G commercialization is still in its initial stage, it’s never too early to start preparing for 6G because it typically takes around 10 years from the start of research to commercialization of a new generation of communications technology,” explained Choi Sung-hyun, head of Samsung’s Advanced Communications Research Center.
“Going forward, we are committed to leading the standardization of 6G in collaboration with various stakeholders across the industrial, academic and government fields,” he said.