SK Telecom, KT increase control over optical transceiver supply for 5G

South Korean telcos SK Telecom and KT are strengthening their control over their supply line for optical transceivers used for their 5G networks, people familiar with the matter told TheElec on Wednesday.

They were preferring to procure transceivers directly instead of using telecom equipment vendors as middlemen to save cost, the people said.

However, telco LG Uplus wasn’t doing so as it mostly uses Huawei equipment for 5G networks, they also said. The Chinese tech giant procures optical transceivers from its home country before supplying the finished equipment to LG Uplus.

SK Telecom has chosen OE Solutions and Opticore as its direct vendors for optical transceivers last year. The telco has begun placing orders to them recently. SK Telecom will expand direct purchases even further down the line, the people said. It has previously left it up to the telecom equipment makers, who purchased and supplied optical transceivers with the equipment.

“SK Telecom wants to save the margin taken by telecom equipment vendors by buying the transceivers directly. But when there is a problem with the transceivers they bought, it can’t solve the problem without the help of a telecom equipment vendor, which is causing frictions,” one of the people said.

Lightron, an optical transceiver maker, was excluded from SK Telecom’s supplier list last year due to the company’s legal troubles with ex-executives. It is also under review by the Korea Exchange on whether it should continue to be listed on the bourse. However, last year, its goods were still being supplied to telecom equipment maker, who in turn supplier their equipment with the receivers to SK Telecom. This will no longer be the case for Lightron.

KT, on the other hand, opted to choose its optical transceiver company themselves and make the telecom equipment vendors use the goods from the chosen companies. “This is a trend that started with the building of 5G networks,” another person said.

KT has chosen OE Solutions, Intec and Zaram Technology as vendors for transceivers and excluded Lightron. OE Solutions was handling the majority of the supply, however, the people said,

LG Uplus, which hasn't adopted such plans, is currently using Huawei equipment for its 5G network in Seoul and northern region of the surrounding Gyeonggi Province. For the southern region of Gyeonggi Province, it is using Samsung Electronics’ equipment. Telecom equipment makers Samsung, Ericsson and Nokia has also previously used South Korean optical transceiver makers for their supply to the country. Samsung uses transceivers from Lightron and OE Solutions.

Optical transceivers are used to switch electric signals to optical signals, and vice versa. It can be attached to telecom equipment after production.