Ericsson, Samsung may have trade policy edge over Nokia in 5G

China 2658 Indonesia 77 Info Tech - Comms Equip 178 Mexico 749 U.S. 4725

Samsung Electronics has signed a contract worth $6.6 billion to supply 5G telecoms network equipment in the U.S. to carrier Verizon for delivery through Dec. 31, 2025. Samsung reportedly beat Nokia for the contract, Reuters reports, while the firm has been steadily building up its telecoms network sales in the U.S. 

Aside from cost and technology issues there are also likely to be regulatory considerations, particularly in relation to supplies of equipment from China. As discussed in Panjiva’s research of June 8 the escalating technology and trade rivalry between the U.S. and China has already led to the blocking of Huawei equipment from U.S. networks.

The Trump administration’s actions have already had a significant impact on flows of telecoms equipment. Panjiva’s data shows that U.S. imports of mobile phone base stations from China dropped to $91 million in the 12 months to July 31 from $241 million in 2018. Imports from other countries than China, Mexico and Europe in the meantime more than tripled to $318 million from $100 million led by shipments from Taiwan, Malaysia and Indonesia. 

It’s worth noting that the major surge in shipments of 5G equipment have yet to get going. Imports in the 12 month to July 31 reached $437 million. While that was 91.7% above the 2017 trough it is just 38% of the level of 2010 when the 4G/LTE roll-out was at its peak.

5G import wave yet to get going, new sources lead

Chart segments U.S. imports of mobile phone base stations by origin. Last 12 month shows period to July 31, 2020.  Source: Panjiva 

A central challenge for Nokia may come from its links to China. Panjiva’s U.S. seaborne import data shows that 84.8% of shipments linked to Nokia were sourced from China in the 12 months to July 31. For others including Samsung Electronics and Ericsson however the ratio is much lower. In the case of Ericsson the ratio was just 10.8% with a further 52.7% shipped from Mexico. The latter may also help provide a hedge against rules of origin that may have a USMCA-based component.

Nokia sourcing dominated by China, Ericsson by Mexico

Chart segments U.S. imports linked to Nokia and Ericsson by origin.  Source: Panjiva 

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