Will Samsung’s 5G Bets Pay Off?
Samsung Electronics’ (OTC:SSNLF) networking equipment division plans to invest heavily in the development of 5G. The technology is expected to drive the next big wave of spending for global wireless carriers, who are looking to mitigate the effects of a saturating wireless market by getting customers to spend more on their wireless data services. Below, we take a look at what the company is doing to drive growth in this market.
Samsung Has Big Ambitions For 5G
Although Samsung’s network business is relatively small compared to its bread and butter smartphone and semiconductor operations, with the total addressable market also being significantly smaller (smartphone market stood at about $450 billion in 2017, compared to network infrastructure at about $37 billion), getting a head start in 5G could prove beneficial for the company. By developing and deploying equipment and underlying 5G technologies, Samsung could drive other business including its smartphone and Internet of Things operations. While Samsung indicated that it wants to become one of the top three global network equipment vendors by 2022 driven by its 5G business, it still has a long way to go. The company was the fifth largest network equipment vendor, with 3% market share in 2017, compared to the top three players who held upwards of 20% share each.
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Samsung has been unveiling some solutions including its 3.5 GHz and 28 GHz spectrum 5G equipment that it will roll out to carriers. The company is also developing 2.5GHz and 37GHz to 40GHz technology. Samsung is also investing about 25 trillion won (about $22 billion) into emerging areas including artificial intelligence and 5G technology.
Samsung In Seeing Progress In U.S. Market
Scoring early wins in the 5G space will be crucial for equipment providers, as the technology is expected to have a relatively long life cycle, and Samsung appears to be faring reasonably well. Verizon selected Samsung for its first commercial 5G launch in Sacramento, California. Samsung was also selected as a supplier of full network gear for Verizon’s commercial fixed wireless access 5G launch in Houston later this year. The company has also conducted multiple 5G technology demonstrations for T-Mobile and supplied 5G-ready equipment to Sprint’s network. A recent report indicated that Samsung, along with Nokia, was replacing Ericsson as base station suppliers as AT&T transitions from 4G to 5G technology. In South Korea, Samsung’s home market, SK Telecom indicated that it has selected Samsung along with Ericsson and Nokia to provide equipment for its 5G services. 5G network trials are expected to begin in December in Korea, with the major carriers expected to roll out their services in March 2019.
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