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Samsung Set To Benefit From Huawei Demise In Smartphone As US Bans Take Effect This Week

Samsung will benefit from US sanctions against Huawei with the banned smartphone maker, left to chase growth in China and fellow communist or dictator run Countries claim analyst.

The US sanctions, which ban the supply of US semiconductors and software to Huawei without prior approval from Washington, are set to take effect this week, with Samsung tipped to be the likely to benefit from the sanctions in the long run with sales set to grow by 31 million units, analysts in Asia claim.

Some analysts claim that the smartphone market will be driven by two brands Samsung and Apple.

“In the worst-case scenario, there is a possibility that Huawei may have to close its mobile business,” said Lee Kyu-ha, an analyst at NH Investment & Securities.

“The global smartphone market will reshape into a two-horse race with Samsung and Apple in leading positions.”

Samsung, the world’s top memory chipmaker, is expected to halt its semiconductor shipments to Huawei this week in a move that will impact Huawei tablets, PC’s as well as smartphones. Huawei is one of Samsung’s five largest customers according to Eugene Investment Securities who estimated that Huawei accounted for 3.2 percent, of Samsung’s sales last year.

Samsung’s mobile business will benefit from the Huawei ban outside of China, according to Park Hyung-wou, an analyst at Shinhan Financial Investment. Last year, 41 percent of Huawei’s smartphone sales occurred in markets such as Australia, Europe and the UK and Canada where sales of their products have come to a standstill.

According to Telsyte Huawei sales in Australia have fallen 75%.

Analysts said Samsung will see the fallout of the US ban on Huawei, but it will actually help the South Korean tech giant’s businesses in the long term, especially its mobile business.

“Samsung may suffer a decline in orders due to US sanctions on Huawei and other Chinese semiconductor firms,” said Kim Dong-won, an analyst at KB Securities.

Analysts said Samsung will likely see the most benefits from the Huawei ban in its mobile business as the two are direct competitors.

According to industry tracker International Data Corp. (IDC), Huawei overtook Samsung as the world’s largest smartphone vendor in the second quarter of the year. The Chinese firm had a 20 percent market share, beating Samsung with a 19.5 percent share.

But analysts expected that Huawei’s position in the smartphone market will decline since the US ban will undermine the company’s efforts to secure smartphone components

“Considering its product line-up and the portion of its smartphone sales by price band, Samsung will see the most benefits from the Huawei ban outside China,” Park said. “Samsung could see a smartphone shipment increase of 31 million units.”

Analysts said Samsung can also expand its presence in the 5G network equipment market, which Huawei has been dominating.

According to market researcher Dell’Oro Group, Huawei’s market share in the 5G market equipment market was 35.7 percent in the first quarter of 2020, far above Samsung’s 13.2 percent share for the fourth spot.

But Samsung has been pushing to secure more orders while the US pressures other countries to not use Huawei’s equipment.

Samsung earlier this week announced it has bagged an order worth 7.9 trillion won from US telecom giant Verizon to supply 5G solutions for the next five years.

“With demand shifts from the US ban on Huawei and countries’ push for 5G base station investment, Samsung’s network equipment will post a good performance,” said Doh Hyun-woo, an analyst at NH Investment & Securities.

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