Samsung Electronics today said its Networks Business will expand its 5G coverage in South Korea and push to expand the business globally including North America and Japan.
Samsung is the 5G network leader in South Korea.

Samsung said it strengthened its 5G business by signing a new large-scale supply contract with Verizon in the U.S.

Samsung Electronics in September announced it won a $6.64 billion mobile network order to provide wireless communication solutions to Verizon in the United States. This was a setback for Samsung rivals Nokia and Ericsson.

Verizon CEO Hans Vestberg told CNBC in July last year that Verizon does not use any Huawei equipment.

Verizon is believed to be Nokia’s biggest mobile service provider customer, JP Morgan research said in a July note.

Huawei is currently relying on the 5G network expansion in China by China Mobile, China Telecom and China Unicom. Huawei has lost considerable business in the United States and Europe.

Samsung said the Mobile Communications Business aims to expand its smartphone sales by strengthening foldable phones and mass-market 5G models. Samsung did not reveal details on the 5G smartphone line up. Strategy Analytics said Apple will overtake Samsung and Huawei in the 5G smartphone business in the second half of 2020.

Samsung will focus on expanding the mobile chip business as it begins to supply 5G 1-Chip SoCs, its first products to feature the 5-nm process technology, in the fourth quarter. In 2021, as market demand for mobile components is expected to recover, the company will focus on expanding shipments of 5G SoCs, high-resolution sensors and DDIs.

Samsung Capex

Samsung’s capital expenditure reached KRW 8.4 trillion in the third quarter, including KRW 6.6 trillion spent on semiconductors and KRW 1.5 trillion on displays. The cumulative total for the January-September period is KRW 25.5 trillion, with KRW 21.3 trillion allocated to semiconductors and KRW 3.1 trillion to displays.

Samsung said the full-year capital expenditure is expected at approximately KRW 35.2 trillion, including KRW 28.9 trillion allocated to semiconductors and KRW 4.3 trillion to displays.

This year’s capital expenditures on the Memory Business will exceed last year’s total due to migrations to advanced process nodes and capacity expansion to address future demand. Annual investment in the Foundry Business is also expected to increase as Samsung expands production capacity, including the 5-nm EUV facility.

Capital expenditures by the Display Panel Business is also set to rise on investment in new Quantum-Dot (QD) Displays and improved processes for mobile panels.

Samsung sales

Samsung revenue climbed 8 percent to 66.96 trillion won. Net profit rose 49 percent to 9.36 trillion won.

Operating profit in the July-September period jumped 59 percent on the back of Samsung’s highest quarterly smartphone profit since 2014 at 4.45 trillion won ($4 billion).

A near 50 percent surge in smartphone sales likely reflected gains in Samsung’s share of the market as U.S. restrictions hit Chinese rival Huawei Technologies, analysts said.

Samsung said its chip profit leapt 82 percent to 5.54 trillion won from a year earlier, as higher sales of low- and mid-end smartphones and inventory buildup from Huawei ahead of the U.S. restrictions offset weak demand from servers.

Samsung’s display business, which counts Apple, among its customers, reported weaker operating profit because of delays of new model launches by a major customer.

Total operating profit in the third quarter was 12.35 trillion won ($11 billion) from 7.78 trillion won a year earlier.

Samsung’s smartphone shipments in the current quarter are expected to drop about 5 percent compared to the previous period due to competition from Apple’s newest iPhone 12 and a lack of new Samsung flagship models, analysts said.

“With Huawei’s presence becoming fainter in the smartphone market, Samsung’s marketing costs are expected to be higher in the current quarter as Apple, Vivo, Xiaomi and Samsung try to take over Huawei’s market share,” said Park Sung-soon, an analyst at Cape Investment & Securities.

Samsung’s display earnings would benefit from robust demand for Apple’s first 5G iPhones, he added.