By Eric Auchard and Olof Swahnberg
LONDON/STOCKHOLM (Reuters) - Ericsson (BS:ERICAs) increased its share of the mobile networks market in the second quarter, while Samsung Electronics (LON:0593xq) jumped into fourth place, data from industry research firm Dell'Oro showed.
Ericsson, the second biggest maker of radio access network (RAN) gear, and Samsung benefited from rising U.S. demand as China's ZTE tumbled into fifth place after it was hit by U.S. sanctions in April.
The world's biggest network gear vendors - No.1-ranked Huawei Ericsson and third ranked Nokia (HE:NOKIA) - all increased their market share quarter on quarter, partly because ZTE's sales plummeted from April onward, Dell'Oro analyst Stefan Pongratz said via email.
"Ericsson was the only vendor of the top three that gained share," he said, adding the Swedish company's share of network gear revenues rose about one percentage point in the second quarter. Dell'Oro data on network equipment is generally accepted as a benchmark for market share rankings within the industry. It declined to disclose actual revenue figures.
Mobile suppliers have struggled with declining growth since demand for 4G network gear peaked in 2015 but the industry is now preparing the first upgrades to next-generation 5G networks starting later this year and on into 2019 in the United States. The jockeying for market share takes on added importance as contract wins at network suppliers improve the chances for follow-on network gear sales as 5G is set to go mainstream after 2020, promising to return network makers Ericsson and Nokia to revenue growth.
NORTH AMERICA BOOST
Ericsson's recent boost came partly from it replacing ZTE as radio gear supplier to Italian mobile firm Wind Tre. It also benefited from faster network upgrades in the North American market, where it ranks as the biggest supplier ahead of Nokia.
Samsung is ranked third in North America, and fourth worldwide, Dell'Oro said.
Network sales in North America rose by double-digit percentages during the first half, Dell'Oro estimated.
From a small base, Samsung's share of revenue in the North American region jumped three-fold during the first half of 2018, Dell'Oro said, without disclosing specific figures.
This reflected Samsung's growing role supplying the biggest U.S. mobile operator Verizon (NYSE:VZ), an upswing in spending at Sprint, and capacity upgrades of existing gear in South Korea, its home market, Dell'Oro said.
Samsung, the world's biggest maker of semiconductors, smartphones and consumer electronics, is a late bloomer in networks, where it hopes to use the transition to newer 5G gear to springboard into the top ranks of the industry. Global leader Huawei, the top supplier in China, the world's biggest mobile market, has enjoyed strong international momentum despite being virtually locked out of the United States and banned in Australia over national security concerns.
Huawei ranks fourth in North America, based on deals in Canada and Mexico.
In mid-July, the U.S. Department of Commerce lifted a ban on U.S. companies selling goods to ZTE Corp (HK:0763), allowing China's second-largest telecommunications equipment maker to resume business in markets worldwide.
Both ZTE and Huawei continue to face sales restrictions in the United States.
"The more interesting question, going forward, will be if Samsung has gained enough momentum to maintain its No.4 position when ZTE shipments start ramping in the second half of 2018," Pongratz said.