South Korean component makers for 5G telecom kits have saw their earnings plummet in the third quarter due to slowdown in investment into 5G networks by telcos in light of the COVID-19 pandemic.
KMW saw its sales drop 72% from a year ago in the third quarter. OE Solution saw sales halved in the same time period. KMW, which makes radio units and filters, posted 74.5 billion won in sales while optical transceiver maker OE Solution marked 30.2 billion won.
In April, the Ministry of Science and ICT had introduced the two companies has its examples of co-growth in 5G. The two companies saw their sales double in 2019 compared to the 2018 but this won’t be likely this year.
KMW marked 279.3 billion won in accumulated sales up to the third quarter, down 53% from a year ago. However, it did maintain profitability, posting 34.6 billion won in operating income during the time period.
OE Solution posted 78.5 billion won in accumulated sales up to the third quarter and 7.8 billion won in accumulated operating income. It also maintained profitability.
Ace Technologies, which also supplies filters to Samsung Network like KMW, marked an accumulated operating loss of 38.8 billion won up to the third quarter. Its sales in the same time period was 159.1 billion won, down 49% from a year ago.
Lightron meanwhile performed the worst with an accumulated sales of 15.2 billion won up to the third quarter. Its operating loss in the same time period was 16 billion won, higher than its sales.
Solid and HFR also saw sales drop steeply. They saw sales for the third quarter drop 31% and 59%, respectively.
HFR’s accumulated sales up to the third quarter was 50.9 billion won while operating loss stood at 16.4 billion won. In the same time period, Solid posted sales of 110.3 billion won and operating loss of 12.2 billion won.
FRTek, Kisan Telecom and CS each posted accumulated operating loss up to the third quarter of 900 million won, 500 million won and 90 million won.
Repeaters, which widen wireless coverage of networks, are installed after the main kits provided by companies such as Huawei, Ericsson, Nokia and Samsung Electronics are installed. Major cities in South Korea such as Seoul had already installed the major equipment but telcos are passive in widening installation of repeaters, a person familiar with the matter said. Repeaters will be needed for consumers to stay on 5G without shifting to 4G LTE in places like subways and shopping malls, they said.
Meanwhile, South Korea had 9.24 million 5G subscribers as of September. The iPhone 12 series launched in the country last month and will surely help boost 5G users in South Korea to reach over 10 million.