Huawei Exclusion Unlikely to Benefit Japanese Makers Much

Japanese telecommunications equipment makers are unlikely to benefit much from domestic carriers' expected moves to exclude Chinese products from their next-generation networks. The impact of the expected exclusion of equipment made by Huawei Technologies Co. and ZTE Corp. from fifth-generation, or 5G, networks would be limited for Japanese makers such as NEC Corp. <6701> and Fujitsu Ltd. <6702>, observers said. Those likely to enjoy rises in market share due to the exclusion are foreign makers, such as Sweden's Ericsson, Nokia Corp. of Finland and Samsung Electronics Co. of South Korea, they added. The Japanese carriers will act in line with a government decision to effectively exclude the two Chinese companies from government procurement contracts due to security concerns. At present, Softbank Corp. <9984> is the only carrier in the country that uses products of Huawei and ZTE in base stations for an existing 4G network. Softbank plans to use no Chinese products in key components of its 5G network system or upgrades to its existing 4G facilities. Rival carriers NTT Docomo Inc. <9437> and KDDI Corp. <9433> are also set to exclude Chinese products from key 5G equipment. According to market research firm MCA Inc., Huawei held 13 pct of the Japanese market for base station equipment in fiscal 2017, while ZTE's share stood at 2 pct. Huawei boosted its share in the recent years with its low-priced products, coming close behind NEC and Fujitsu, each of which holds an 18 pct share. Huawei was expected to start a sales offensive for 5G network equipment. The exclusion of Chinese makers looks an opportunity for Japanese players. But many are cautious. Industry officials say, "Business is not that simple," and "It's hard to predict the impacts." Softbank procures equipment also from Ericsson and Nokia. Given their prices and technologies, "overseas players are expected to plug the hole" created by the absence of Chinese makers, MCA head Hironori Amano said.