Huawei decision tests Samsung

Samsung can make a wise choice and maintain its cooperation with Huawei amidst the US chip ban, as the firm, which has been “deeply” relying upon China, can take this opportunity to regain its market share by “supporting” Huawei, especially when a visit to South Korea by a senior Chinese diplomat sends positive signs for bilateral ties, observers said.

The South Korean tech giant should also weigh whether it could afford plunging revenue if Huawei, one of the major purchasers of its memory products, turns its back on the company, analysts said.

Yang Jiechi, director of the Office of the Foreign Affairs Commission of the CPC Central Committee, will consult with officials in the South Korean city of Pusan from Friday to Saturday, at the invitation of Suh Hoon, South Korea’s top national security adviser.

The ongoing high-level exchange also comes as the technology confrontation between China and the US becomes more intense, with some forecasting that issues such as Huawei could be included in the agenda, as South Korea holds an important position in the global semiconductor industrial chain.

South Korea maintains a very close economic relationship with China, and the country’s economic development is closely intertwined with China’s industrial chain in every way, Ma Jihua, a veteran industry analyst, told the Global Times, indicating that any blow felt by China could also be felt by South Korean firms in the semiconductor sector.

Even as the US intensifies its bans, it’s possible the two countries, and also Huawei and Samsung, may still cooperate in some “low-profile” way, Ma said.

If Samsung could help Huawei get through these difficult times “in some way,” the South Korean firm could greatly improve its prestige and regain its lost fame in the Chinese market, experts noted.

China represents over 70 percent of Huawei’s smartphone shipments, while Samsung’s only has a one percent market share in China, and is far more exposed to markets that are still being damaged by the pandemic, including Brazil, India, the US and Europe, Canalys, a market analyst firm, said.

When China first proposed its own 3G standard, the TD-SCDMA in 2008, Samsung, the world’s third largest smartphone maker at the time, stepped out and voiced its support while others turned a blind eye. It has since occupied a rising smartphone market share and improved its brand awareness in the Chinese and international markets.

The growing momentum came to a halt after South Korea installed the remaining launchers of the US anti-missile Terminal High Altitude Area Defense (THAAD) system in 2017, which China strongly opposed and led to cooling ties.

“Samsung can also make the right choice this time,” Ma said.