KMW reduces reliance on Samsung Electronics 

Telecom component maker KMW posted 204.7 billion won in sales for the first half of 2020, with Nokia and ZTE accounting for 77% of that.

Meanwhile, long time customer Samsung Electronics only accounted for 5% of sales, according to the company’s filings to South Korean financial regulators on Tuesday.

KMW posted operating profits of 28.6 billion won in the first half of the year. Sales dropped 38% year over year while profits declined 64% compared to the same time period last year.

Its margin rate for the first half dropped to 14% year over year from 24% of 2019.

KMW saw sales of its filter business triple to 48.6 billion won in the second quarter from the previous quarter. The company is supplying them for 5G base stations of ZTE. The Chinese telecom giant accounted for 19% of KMW’s sales in the first half.

Nokia was KMW’s biggest customer, account for 58% of the South Korean company’s sales in the time period. 

In the first half of 2019, Nokia accounted for 55% of its sales while Samsung accounted for 22%. ZTE accounted for 12%.

For the full year of 2019, Nokia accounted for 64% of its sales, followed by Samsung’s 13% and ZTE’s 12.6%. Its reliance on Samsung is continuing to decrease.

KMW and Samsung’s network business saw their relationship soar in recent years but have recently patched things up, a person familiar with the matter told TheElec. Samsung can’t completely cut off KMW as it has quality technology that makes it attractive to its rivals such as Nokia and ZTE, they said.

KMW is co-developing remote radio head for 4G base stations with Samsung. The supply for the goods to Samsung will start in the second half of 2020.

Ace Technologies, a rival to KMW and also a supplier of filters to Samsung, saw 102.5 billion won in sales and operating profits of 27.8 billion won in the first half of 2020. Ace was supplying more filters to Samsung compared to KMW, the person said.

Meanwhile, telecom component suppliers are looking to the fourth quarter for sales increase as COVID-19 pandemic continues to affect telcos’ plans to deploy 5G networks.