Samsung wins $6.6 bn deal to supply 5G equipment to Verizon

Samsung Electronics Co. has clinched a 7.9 trillion won ($6.6 billion) deal to supply fifth-generation wireless communications solutions to Verizon Communications Inc. in the US, marking the biggest single contract ever for such equipment.

In a regulatory filing on September 7, Samsung said its US subsidiary Samsung Electronics America signed an agreement to supply 5G network equipment and provide maintenance and repair services to the top American mobile carrier until December 31, 2025.

The deal marks Samsung’s and the country’s single-largest telecommunications equipment sales contract ever in terms of value. It also comes as Huawei Technologies Co., the 5G devices market leader, is grappling with US sanctions and Washington-led international efforts to shut out the Chinese company.

“With this latest long-term strategic contract, we will continue to push the boundaries of 5G innovation to enhance the mobile experience for Verizon’s customers,” Samsung said in a statement.

The deal is a follow-up to Samsung’s wireless network supply contract with Verizon, AT&T Inc. and Sprint Corp. in 2018.

Samsung is among the first to supply 5G network solutions globally after it helped Korean mobile carriers commercialize the world’s first 5G service in 2019. It has also supplied equipment to Japan’s KDDI Corp.

The latest deal would cement Samsung’s status as a major equipment supplier in the US market, where the Korean company firmly set foot in 1999, and enhance its odd of getting similar orders not just from the US, but also from other markets such as Europe.

The US accounts for about a quarter of wireless network investments by global equipment suppliers and Verizon is the largest mobile carrier there, with 183 million subscribers.

US mobile carriers are widely expected to upgrade their wireless networks in line with Apple Inc.’s move to roll out the iPhone 12, its first 5G smartphone, next month.

SAMSUNG BETS ON NEXT-GENERATION NETWORKS

Samsung, the world’s largest memory chip and electronics goods maker, has been pushing to expand its presence in the 5G equipment market and has invested heavily in sixth-generation mobile networks.

As of the end of 2019, China’s Huawei topped the 5G telecoms equipment market with a 32.6% market share, followed by Ericsson (24.5%), Nokia (18.3%) and Samsung (16.6%).

Samsung said the deal with Verizon would also lead to multiple subcontracts with its smaller Korean partners.

“We are producing network products in partnership with 86 small- and mid-sized local firms. Big deals like the one with Verizon will help smaller local companies advance in the global market,” said a Samsung official.

Samsung Electronics Vice Chairman Jay Y. Lee discussed ways to strengthen business cooperation with Verizon CEO Hans Vestberg, who visited Seoul last year.

While unveiling a 180 trillion-won investment plan in 2018, Samsung designated 5G as one of its four growth projects for the future, along with artificial intelligence, automotive chips and bio.

Write to Seung-Woo Lee and Hyung-Suk Song at leeswoo@hankyung.com