By Chai Soo-Woong
woong@ddaily.co.kr

Digital Daily

Controversy continues over security problems that may caused by LG U+’s recent choice of Huawei Technologies, a Chinese telecommunications equipment and service company, as a major contractor for the deployment of its LTE network upgrade. In particular, the U.S. government is making an issue of the contact for security reasons. A rumor has been also floating around that Samsung Electronics is one of the alleged masterminds of the controversy.

CEO of LG U+ Lee Sang-chul has hit back at security concerns, saying there would be no security problem whatsoever. He also said the company plans to get a security test by an international agency on Huawei equipment.

As to the allegation that Samsung Electronics is one of the forces propelling the controversy, in particular, Lee said, “In fact, Samsung Electronics has to applaud our decision. Huawei’s entry into Korea would allow Samsung a much easier access to the Chinese market.”
Samsung Electronics is pointed as a propeller of the Huawei controversy because of the impact that Huawei may bring to Samsung’s share of the telecommunications equipment market in Korea. Samsung would suffer a blow when the Chinese firm starts to supply base station equipment to other mobile carriers in Korea such as SK Telecom and KT, following LG U+.

But the unconfirmed rumor that Samsung Electronics is involved in the Huawei controversy would not be helpful not only to Samsung but also to the Korean economy as a whole. Korea is closely connected with the United States in national security but its economy and industry is more susceptible to China.

Chinese President Xi Jinping told the visiting U.S. Vice President Joe Biden on Dec. 4 that he hopes for a wider access to the U.S. market concerning advanced technology. He also said China welcomes U.S. investment in the field.

If U.S. politicians continue to take issue with the Huawei’s business in Korea and if the rumor about Samsung’s involvement in the controversy further spreads, the possibility that Samsung Electronics would experience unintended disadvantages cannot be ruled out.
However, Samsung neither confirms nor denies the allegation. It is reluctant to respond to the controversy itself.

It is difficult to predict the effect of the rumor about Samsung’s involvement in the Huawei controversy, which is apparently attributed to the possible impact on the Korean telecommunications equipment market. But when China is informed about the controversy, it can natively affect Samsung’s business in China.