Samsung lands significant 5G contracts – Samsung Gets Closer To Target With $6.6 Billion Verizon 5G Deal
Samsung has landed one of its most significant 5G contracts. Verizon signed the South Korean conglomerate for a five-year 5G deal worth more than $6.6 billion. Samsung revealed the Verizon 5G contract in a regulatory filing in Korea today (September 7), sending its stock soaring.
Samsung aiming for 20% market share
The latest Verizon 5G contract brings Samsung closer to capturing at least a 20% share of the global 5G technology market by the end of 2020 and generally grow its networking business.
Samsung competes with Huawei, Ericsson, and Nokia in the telecom network gear market. But it is the smallest of these vendors with just a 3% share of the global market last year, compared to Huawei’s 28%, Nokia’s 16%, and Ericsson’s 14%.
However, the transition to 5G connectivity has offered Samsung a chance to become a major network equipment vendor. For example, according to Dell’ Oro Group, Samsung now controls about 13% of the global 5G technology market.
Huawei’s political woes and Nokia’s quality challenges have bolstered Samsung’s 5G fortunes. The US government is leading a campaign to shut Huawei out of Western 5G markets on fears China could use Huawei products to spy foreign governments and citizens. Consequently, Huawei has been locked out or has lost much of its market in Australia, Britain, Canada, and India. Its 5G products have faced quality issues for Nokia, hence denting its credibility as a 5G supplier.
Therefore, operators unable to secure 5G supplies from Huawei and are worried about Nokia’s product quality turn to Samsung and Ericsson. To capitalize on the opportunity, Samsung has been making strategic acquisitions to bolster its 5G business.
The latest Verizon deal comes as a significant stamp of approval that could help Samsung win more business from other operators. In addition to Verizon, AT&T and T-Mobile have also signed Samsung as their 5G supplier. Operators are investing in expanding their 5G capacity as the adoption of the technology increases. For example, Apple’s first 5G iPhone launch later this year promises to increase demand for 5G services.
Samsung’s double blessing
For Samsung, 5G adoption comes as a double blessing considering its role as a 5G equipment vendor and smartphone maker. For example, Samsung’s networking business is on track to see a huge revenue boost this year with the Verizon 5G contract win and other South Korea deals and beyond.
According to Allied Market Research, the global 5G technology market will reach $5.5 billion in 2020 and grow to $667.9 billion by 2026. Samsung’s network unit generated about $4.2 billion in revenue in 2020.
On the other hand, demand for 5G-capable smartphones will increase as operators roll out 5G networks. And Samsung has an advantage given its position as the world’s largest smartphone company.
