'5G Spectrum Auction' Expected in Korea Next Year... Beneficiaries Among Telecom Equipment Stocks [Weekend Money]

Ripple Effects of Physical AI Adoption
Top Picks: KMW, RFHIC, HFR, and Others

As the commercialization of 5G standalone mode (SA) and the proliferation of artificial intelligence (AI) base stations are accelerating in South Korea, there are growing expectations that an additional 5G spectrum auction is highly likely to take place next year. If the spectrum auction proceeds, it is analyzed that domestic wireless communication equipment companies could benefit.

According to a telecom equipment industry analysis report by Hana Securities released on September 5, regulatory authorities and the three major telecom operators in South Korea launched a public-private consultative body on August 27 to promote network investment in the AI era. At this meeting, participants discussed the introduction and investment directions of next-generation technologies such as AI Radio Access Networks (AI RAN) and 6G against the backdrop of combined capital expenditures (CAPEX) by the three telecom operators shrinking from 960 billion won in 2019 to 602 billion won expected in 2025. After future practical discussions, the government plans to establish and announce comprehensive measures for next-generation network investment and regulatory improvements within the year.

AP Yonhap News

In line with this, Hongshik Kim, a researcher at Hana Securities, analyzed, "An additional 5G spectrum auction is expected in South Korea in 2027. It is highly likely that related policies will be announced at the end of 2026, and, along with the evolution to 5G SA, the rollout of AI base stations is anticipated. It is expected that investments in 5G will resume domestically in 2027 to ensure the success of Physical AI."

The increasing likelihood of an additional 5G spectrum auction in South Korea is attributed to the competition in Physical AI. With the United States and China rapidly advancing in AI agent and robotics sectors respectively, there is a need to strengthen AI competitiveness through network superiority in South Korea. Kim noted, "The government’s policy goal is to be among the three major AI nations, but South Korea has yet to achieve significant results, leading to inevitable anxiety. The United States is already demonstrating an overwhelming performance gap in the AI agent domain, and China has recently shown remarkable achievements in the robotics sector."

Hana Securities pointed out that although South Korea was recognized as a telecommunications powerhouse when 5G was first introduced in 2019, it is now lagging behind the U.S. and China. Factors weakening its competitiveness include the use of ultra-high-frequency bands, the volume of 5G spectrum in use, and the adoption of 5G SA. For instance, if the U.S. uses the upper C-band, its total 5G spectrum usage will surpass 700 MHz—more than double the 300 MHz currently allocated for 5G in South Korea. The U.S. is planning to utilize not only the 3.7 GHz band but also those around 4 GHz, whereas South Korea is still utilizing only the 3.5 GHz band.

Spectrum auctions represent a major business opportunity for wireless communication equipment companies. When telecom operators win licenses at spectrum auctions, it typically leads to subsequent investments in network equipment, including base stations. Kim compared it to the process of securing land before constructing a house.

The domestic spectrum auction is expected to be a significant opportunity for small and mid-sized domestic telecom equipment companies as well. Given the high proportion of localization and suitable models for small businesses, it is highly likely that domestic equipment suppliers will deliver to the three major telcos in South Korea. Kim added, "Samsung Electronics has a strong market share in the domestic market, and unlike overseas, Ericsson and Nokia consortiums must inevitably form partnerships with local small and mid-sized telecom equipment companies here."

In line with these developments, Hana Securities recommended increasing the weight of the telecom equipment sector in portfolios and cited RFHIC, KMW, HFR, LIG NEX1 Accuver, OE Solution, and Solid as top picks.

Hana Securities’ target prices for major stocks are: Solid at 30,000 won, RFHIC at 150,000 won, LIG NEX1 Accuver at 80,000 won, KMW at 70,000 won, ICTK at 60,000 won, WooryNet at 25,000 won, RF Materials at 75,000 won, OE Solution at 60,000 won, Ubiquoss at 22,000 won, HFR at 50,000 won, and Sena Technologies at 80,000 won.

This content was produced with the assistance of AI translation services.