In the mobile world, Samsung are known for their range of smartphones, tablets and smartwatches, which over the years have run a number of operating systems including Bada, Tizen, Windows Phone and Android. The wider business also builds many core components of smartphones, including displays, memory chips and System-on-Chips. Samsung also sells a large number of televisions and consumer white goods around the world, and even builds ships, so it may not come as a surprise that the conglomerate has a mobile networking division. In many markets, Samsung is a major player but in the mobile networking industry, it is relatively small compared with the likes of Ericsson, Huawei, Nokia and Alcatel-Lucent. Nevertheless, it is a supplier of two North American national carriers (Sprint and Verizon Wireless).
One of the patterns we have seen within the telecommunications industry is a wave of consolidation. We’ve seen carriers and equipment providers merge: Nokia’s purchase of Alcatel-Lucent will help it better compete with Ericsson and Huawei, whereas Ericsson and Cisco have agreed to cross-sell one another’s products. For the networking side of things, this means that Samsung’s networking division has become something of a smaller fish in a smaller pond. Considering how the wider business has struggled to show growth in the competitive mobile market, and the increasing competition in the networking sector, this is not surprising. The source website has seen reports that Samsung is considering selling the networking division on to a larger competitor. The benefit to a larger network provider may be more about Samsung’s hold in the South Korean market, where carriers are starting their investment into 5G technologies and are showcasing the latest network developments for the 2018 Winter Olympics. We have already seen Samsung Networks demonstrating some impressive 5G network speeds.
Who might be interested and able to buy Samsung’s networking division? Because of a restriction placed on Chinese-run companies winning networking contracts because of security concerns, this means that Huawei (and ZTE) are almost certainly going to be excluded from buying from Samsung. This leaves Ericsson and Nokia in the running, or a venture capital firm. Industry experts consider Ericsson would have the most to benefit from the deal and are the favorite bidder – but whilst at least one anonymous company executive has explained there is talk of Samsung selling on the networking business, we have no reports of who may be in discussion.