The domestic telecommunications equipment industry is gearing up to target the open RAN market. Open RAN is a standardized technology that allows base station equipment from different manufacturers to interconnect. The United States actively promoted the introduction of open RAN in 2019 during the first Trump administration to counter the world's largest telecommunications equipment company, Huawei. If interconnection among non-Huawei equipment from companies like Ericsson, Nokia, and Samsung Electronics is possible, global mobile carriers would not need to rely on Huawei equipment.
Huawei has been hesitant to participate in open RAN due to concerns that interconnecting its products with those from other manufacturers could degrade performance. The U.S. is expected to actively promote the expansion of open RAN next month with the inauguration of the second Trump administration.
Solide, HFR, and Samji Electronics expect to gain indirect benefits as their clients, Ericsson and Samsung Electronics, secure orders for open RAN equipment from major U.S. telecommunications companies.
◇ Solide, HFR, and Samji Electronics accelerate open RAN technology development
According to industry sources on the 23rd, Solide decided to develop open RAN technology in collaboration with the U.S. National Telecommunications and Information Administration (NTIA) after receiving a $33 million grant this month. Currently, the U.S. government is selecting companies that can develop open RAN technology to address security concerns in the telecommunications sector and enhance technological competitiveness. Solide plans to fully promote the commercialization of the technology developed this time.
HFR shared results from testing base station devices and solutions based on the standards of the 'Open RAN Alliance,' a global standardization organization for open RAN, with 10 global companies including SK Telecom, Ericsson, and Nokia this month. HFR is reported to have conducted verification of components that can reduce power consumption applied to open RAN equipment, specifically the Radio Unit (RU). The RU is a component that aids the exchange of signals between devices such as smartphones and base stations.
Samji Electronics succeeded in obtaining the K-OTIC international certification for open RAN equipment from the Ministry of Science and ICT last month, following Solide. With the certification, overseas telecommunications companies will be able to adopt Samji Electronics' equipment without restrictions. The company plans to expand its overseas market for RU equipment used in open RAN base stations through this certification.
Domestic telecommunications equipment companies find themselves in urgent need of performance recovery through targeting the open RAN market. Solide's operating profit for the third quarter of this year was 7.8 billion won, a decrease of 1.3% compared to the same period last year, while Samji Electronics' operating profit was 20.5 billion won, down 36.5% from the previous year. During the same period, HFR's operating loss was 2.8 billion won, managing only a slight reduction compared to losses in the previous year. This decline in telecommunications equipment demand is interpreted as a result of the completion of 5G (fifth-generation mobile communication) infrastructure in major countries such as the U.S. and Japan.
◇ The second Trump administration expected to promote open RAN expansion to counter China
Donald Trump, the president-elect of the United States whose term begins in January next year, stated during his campaign that "strengthening security standards for core systems and networks and protecting them will be a national priority." Since 2019, the U.S. has banned Chinese telecommunications equipment over concerns of information leakage and has urged allies to implement similar sanctions.
As of the third quarter of this year, Huawei held a 32.6% market share, leading the global telecommunications equipment market. Industry experts believe that the U.S. has no choice but to actively adopt open RAN equipment to curb the influence of Chinese telecommunications equipment. Acting Chairperson Rosenworcel of the U.S. Federal Communications Commission (FCC) explained the open RAN activation policies in 2021, noting the need to "halt the market expansion of unreliable network suppliers while also accelerating America's innovation efforts."
Ericsson secured a $17.6 billion contract from AT&T in September. The telecommunications equipment supplied by Ericsson to AT&T reportedly incorporates open RAN features. Samsung Electronics generated $1 billion in revenue from the global open RAN market last year, achieving a leading share by sales. The company is reported to have boosted related sales by supplying open RAN equipment to U.S. telecommunications company Verizon.
According to market research firm Research and Markets, the open RAN market is projected to grow at an average annual rate of 42% from 2022 to 2030, with the market size expected to exceed $32 billion (approximately 46 trillion won) by 2030. The global open RAN market size was estimated at $2.3 billion (around 3.33 trillion won) last year.
Song Young-geun, head of the Future Strategy Research Office at the Korea Electronics and Telecommunications Research Institute (ETRI), stated, "Once the second Trump administration is established, the open RAN market will begin to grow in earnest. Since Samsung Electronics is expected to benefit from the activation of the open RAN market, domestic telecommunications equipment companies may also anticipate a recovery."