South Korea’s Samsung stands to benefit from crackdown on China’s Huawei

by WorldTribune Staff, February 1, 2019

A series of moves by the United States and several other nations to ban China’s Huawei from their 5G networks could result in South Korea’s Samsung climbing to the forefront of 5G, tech industry analysts say.

The United States suspects that Huawei equipment might provide a backdoor for Chinese spying efforts. Australia, Canada and Germany, have joined or are considering joining the U.S.’s move to exclude Huawei from their 5G networks.

“The United States’ attack on Huawei has political intentions to block China’s global strategy in the 5G industry,” said Choi Seol-Hwa, an analyst from Korea Investment & Securities. “The conflict between the two countries is expected to drag out for long. This would lead to global economic slowdown, but is also bringing new opportunities, benefiting Korean companies.”

The U.S. government, which filed criminal charges against Huawei last month, is moving to impose sanctions against Huawei, claiming the firm tried to steal trade secrets from T-Mobile and worked to circumvent U.S. sanctions on Iran.

Related: U.S. indictments: Huawei paid bonuses to employees for tech theft, Jan. 29, 2019

Huawei has depended on U.S. suppliers including Micron Technology for memory chips and other components necessary to manufacture smartphones.

“If Huawei’s supply chain were to be disrupted by an export ban from U.S.-domiciled companies, it would have a massive impact on Huawei, and it would certainly benefit Huawei’s rivals,” Peter Richardson, director at global consultancy Counterpoint Research, was quoted as saying by Nikkei Asian Review. “Samsung would feel the relief of competitive pressure in Europe and the Middle East for sure.”

The European Union is also considering proposals to exclude Huawei from 5G networks for next-generation mobile networks, according to Reuters.

Choi noted that “Samsung Electronics’ 5G equipment is more competitive compared to its 4G equipment. About 30 percent to 50 percent of sales of Huawei are created in the European market. If a vacancy is created in that market, Samsung is expected to fill that.”

According to Korea Investment & Securities, Huawei took first place in the global telecommunications equipment market in 2017 with a 28 percent market share on the back of active support of the Chinese government and price competitiveness of the products.

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