Samsung Electronics has signed a network equipment supply deal with US’s largest carrier Verizon for 7.9 trillion won (US$6.64 billion), the company said on Monday.
The deal will likely have minimal impact on Samsung Network’s sales for this year but will come in affect in 2021.
The five year contract will last until December 31, 2025.
Samsung will secure on average 1.6 trillion won a year from the deal. The contract is the largest to date from the South Korea’s telecom equipment industry.
Last year, Samsung Network marked around 5 trillion won in sales, its best annual performance to date.
The South Korean tech giant seems positioned to take market share from rival Nokia in the US through the deal.
Samsung’s equipment only accounted for around 5% of Verizon’s 4G LTE network, with the rest being supplied by Ericsson and Nokia.
The Korean company is expected to provide both 4G and 5G equipment under the deal. Verizon will likely install new 4G equipment using Samsung’s goods in locations it is using the company’s 5G equipment for its network.
Samsung Electronics vice chairman Lee Jae-yong was looking it at the company’s network business with a long-term view and a matter of South Korea’s national interest in mind, people familiar with the matter said. Lee spearheaded the deal with Verizon aggressively as the company’s previously set goal of securing 20% of global market share in teleco equipment by 2020 became more and more remote.
Nokia’s delay in developing 5G technology also helped Samsung, one of the persons said. The Finnish giant was slow to react to 5G when South Korea rolled out the network in 2019, while Samsung has come close to technology to rivals Ericsson and Huawei, they said.
Ericsson will also likely maintain its 50% market share in 5G equipment order from Verizon, they added.
Samsung Network uses 86 South Korean subcontractors __ around 50% of its 5G equipment uses components manufactured in its home country.
Seojin System and Glovitech were supplying the cases for the 5G equipment. Antenna and filters within the cases were supplied by Ace Technologies, KMW and RFTech. RFTech began supply to Samsung last year and only provides goods for 5G equipment.
Samsung’s Verizon deal will also likely spur the adoption of GaN RF, beginning next year. GaN RF was being more widely used abroad.
The South Korean tech giant gets its GaN power amplifier from local company RFHIC.