US 5G Network Deployment Is Accelerating

5G infrastructure rollout in the US continues to move forward as major operators’ 5G deployment schedules remain on track and more 5G smartphones are ready. In September, Verizon signed a $6.6 billion 5G contract with Samsung for network equipment & services through the end of 2025. T-Mobile also signed a 15-year agreement with American Tower, which will enhance its access to American Tower’s tower sites and facilitate T-Mobile’s deployment of 5G network nationwide in the US. Meanwhile, Dish Network selected Nokia to supply core network products for its 5G network buildout. We believe this is just the beginning as the 5G infrastructure buildout will require major changes to the network architecture and adoption of next-generation technologies that enable mmWave and massive Internet of Things. Telecom operators are also increasing spending to purchase mid-band spectrum (auctions expected in Dec 2020 and 2021) which will enable broader 5G coverage. The ramp up of 5G network spending in the US will be positive for network equipment vendors such as Ericsson, Nokia and Samsung, as well as semiconductor device suppliers for base stations such as Marvell Technology and Xilinx.

Source: Credit Suisse Research, September 2020.

Samsung Electronics is a leading manufacturer of memory chipset and smartphones, and a pioneer in networking & mobile communications technology as Samsung spearheaded the commercialization of 5G technologies in South Korea.

With a broad product portfolio & vertical integration advance (from semiconductors all the way to equipment & devices), Samsung is well-positioned to gain market share in both 5G smartphone and network infrastructure markets. The recent 5G equipment contract win at Verizon is a major validation for Samsung’s leadership in mmWave 5G technology. The company has quickly risen to be the fourth largest telecom equipment supplier globally with 8-10% market share (up from around 3% in 2019). Samsung also benefits from share shifts driven by growing security concerns on Huawei in US, Europe, India and Australia.

Samsung’s memory business also benefits from the ramp up of 5G smartphones as well as exponential data growth in cloud & data center driven by accelerating digitalization trends.

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