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Samsung looks to capitalise on Huawei’s woes

Samsung

Samsung is reported to be investing heavily in infrastructure business to fill the market gap left by Huawei’s ban from 5G business in the developed markets.

Sources inside Samsung and other industry executives have told the Reuters that Samsung is pouring resources into its telecom infrastructure business unit, aiming to seize the opportunity created by the ban on Huawei in a number of important western markets. Samsung’s infrastructure business had been insignificant until recently, trailing Huawei, Nokia, Ericsson, Cisco, and ZTE, according to figures from the research firm Dell’Oro Group. But it saw a chance when first ZTE then Huawei found themselves being shut out of the lucrative 5G markets in one country after another in the developed world.

To join the ranks of Ericsson and Nokia, Samsung is said to be moving strong management resources as well as software engineers from the smartphone unit to the infrastructure business and to have started charming Huawei’s current customers. One of the global heavyweights that has been impressed by what Samsung has got to offer is Orange. After visiting Japan, where Samsung was conducting a 5G trial, Mari-Noëlle Jégo-Laveissière, Orange’s CTO, was happy to include Samsung in its shortlist of alternative suppliers, after the telco decided to ban Huawei, its long-term top supplier, from its 5G business in France. An Orange 5G trial with Samsung will be conducted this year.

One difficulty Samsung needs to overcome is the shortage of talents. To start with it needs good engineers. To this end, Samsung’s heir apparent and de facto head Lee Jae-yong, or Jay Y. Lee as he is known in the western world, has sought the support from the Prime Minister when the latter visited Samsung in January. “We need more software engineers and want to work with the government to find that talent,” Lee was quoted by government officials. Samsung’s infrastructure unit has a workforce of about 5,000 people, both Nokia and Ericsson employ more than 100,000 people, and Huawei is said to have employed 200,000 people.

Another type of people Samsung needs to get onboard is those that can build operator relations. This needs a different skill sets from what Samsung has excelled in dealing with distribution channels for its smartphones, and it needs them to be in all the right places in the mature markets, and, better still, to have already worked with the potential operator customers. Due to the nature of business, trusty relationship with telcos often need to be cultivated for years or even decades.

However, Samsung may have just chosen a perfect timing for expansion. Both Ericsson and Nokia are laying off people, either wholesale shutting down of full business units, or selectively downsizing certain teams. Many of these functions have actually had customer interface experience. Huawei’s founder meanwhile has warned that the company may also need to adopt some cost control measures. Though they could not bolster Samsung’s strengths to the same level of its competitors, these could all be good recruitment targets for Samsung to pounce.

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