Samsung Looks to Europe to Expand Network Equipment Business; vRAN is the key
Samsung Electronics is focusing on Europe to retain its accelerating growth in the network equipment business. Even though Samsung Electronics is number one in memory chips and smartphones, it is behind Huawei, Ericsson, Nokia and ZTE in the 5G network equipment market.
Samsung Electronics had a 6 to 8% global telecom equipment market share as of the first quarter of 2021, according to Dell’Oro Group’s latest report. The company is just below Cisco (the world’s dominant router maker) and slightly ahead of Ciena (optical network market leader) to be ranked sixth over all in global telecom equipment revenues. Samsung is likely #5 in 5G RAN revenues, behind Huawei, Ericsson, Nokia and ZTE, but its 5G market share can not be determined at this time.
Since Samsung landed a $6.65 billion 5G infrastructure deal with Verizon and another huge deal with Japan’s NTT Docomo, its 5G network equipment business has been on an upward sales trajectory.
Samsung is taking extra steps and expanding its range of 5G trials in Europe. Currently, Samsung is conducting 5G trials with European telecom companies such as Deutsche Telekom in the Czech Republic, Play Communications in Poland, and other undisclosed European carriers.
Samsung recently won a big contract with Vodafone to supply the big European network operator with their cloud native virtualized RAN. That will be deployed in an Open RAN environment with other vendors (see below). Samsung says that it has been continuously leading in vRAN innovation, most recently showing the capability to support the multi-gigabit speeds of Massive MIMO radios on commercial off the shelf (COTS) servers.
“We are proud that this collaboration with Vodafone — one of the premier carriers in the world — will be the first scaled deployment of our pioneering 5G technologies in Europe, including vRAN and O-RAN,” said Paul Kyungwhoon Cheun, president and head of Networks Business at Samsung Electronics, in a statement. “This is a major step forward, as more operators are transitioning into new RAN technologies to prioritize user experience and efficiency.”
Vodafone’s initial focus will be on the 2,500 sites in the UK that it committed to open RAN in October 2020. According to Vodafone, it’s one of the largest deployments in the world and will be built jointly with Dell, NEC, Samsung and Wind River.
Asia, Oceana and India:
Samsung is also looking to expand in markets such as Southeast Asia, Australia and India. The South Korean giant said it has gained multiple new clients for its 5G equipment and systems which have increased by nearly 35% a year on average.
Samsung’s 5G vRAN kit debuted in July, adding a virtualized distributed unit (vDU) to its virtualized central unit (vCU) so the entire baseband is virtualized, along with a range of radio units. Samsung is Verizon’s 5G RAN vendor in parts of upstate New York and New England, a Verizon spokesperson confirmed. This is depicted in the illustration below:
Block Diagram of Samsung’s vRAN
Contrary to a recent Reuters article, there are no 5G stand alone/5G core networks in South Korea. Rather, South Korean telecom operators currently provide 5G services via non–standalone 5G networks, which depend on previous 4G-LTE networks which do NOT have a virtualized core (the 4G core network is called Evolved Packet Core).
The country’s three operators (SK Telecom, KT and LG Uplus) launched 5G service in April 2019. 5G NSA networks are available mostly in large Korean cities. Their 5G RANs are based on 3GPP Release 15 version of 5G-NR. In April 2021, the three operators agreed to share their 5G networks in 131 remote locations across the country, Yonhap news agency reported
Samsung’s network equipment business is relatively small for the conglomerate. It had revenue of 236.8 trillion South Korean Won ($212.50 billion) for 2020. The company does not announce separate numbers for the business and most analysts don’t have estimates for it.
Samsung said since the 5G network rollouts began in 2019 in various countries, it has seen the number of new clients for its 5G equipment and systems rise by 35% a year on average.
Huawei, ZTE and other Chinese telecom gear vendors have faced backlash for various security and privacy issues. Since the U.S. has excluded Huawei from 5G rollouts, it has provided multiple opportunities to competitors to expand its market share. Many Central and Eastern European countries, including Romania, Poland, the Czech Republic and the Baltic states, have been broadly receptive to American arguments against Huawei.
Samsung is capitalizing on its virtualized RAN technology that allows telecom companies to freely use off-the-shelf network equipment in various combinations to connect users to networks. This is how the company plans to win 5G contracts that might otherwise have been awarded to Chinese telecom vendors, especially Huawei. For example, Verizon says they’ve already adopted Samsung’s vRAN technology for their 5G RAN.
Samsung’s goal is to become top-three in the 5G network equipment business, Woojune Kim, executive vice president of Samsung’s networks business told Reuters. However, Kim did not give a timeframe, citing the industry’s long incubation time period. “It took us about a decade to win the Verizon deal, since forming early relationships… It takes persistence,” he said.
Therefore, the period to achieve the #3 goal is still unknown. It might depend on Huawei’s revenue collapsing due to sanctions and Samsung moving ahead of ZTE to claim the #3 position behind Ericsson and Nokia.