Stockholm — Ericsson CEO has vowed to double efforts to regain lost market share in China after Sweden blocked China’s suppliers from deploying 5G. This was hostile to Beijing and hurt the business of equipment manufacturers.
China accounted for about 10% of Ericsson’s revenue last year, but fell sharply after its home country Sweden banned Huawei from 5G networks due to security risks. Huawei strongly denies this.
Ericsson won about 2% of China Mobile’s 5G contracts, down from 11% last year, and gained a 3% share of joint 5G radio contracts from China Telecom and China Unicom.
“We’ve been in China for 120 years and we’re not going to give up easily,” CEO Borje Ekholm said in an interview with Reuters. “We will show that we can add value to China.”
Ericsson was lobbying the Swedish government in support of Huawei, warning of possible retaliation by China, but the ban was passed and it was upheld in court.
“To be honest, I don’t think there was any support from the Swedish government,” Echom said.
Analysts warned that Ericsson, based in Sweden’s technology hub north of Stockholm, could lose most of its Chinese operations under a deal with its Nordic rival Nokia.
Nokia, Finland, which did not have a radio contract in China last year, won its first contract in the second round award, but Ericsson has been able to maintain a slight advantage so far.
“If we were completely defeated, it would have put us at a competitive disadvantage from a technical point of view,” Ekholm said.
China is at the forefront of 5G network deployment, accounting for more than half of the equipment used worldwide in next-generation networks, making it an important market for all telecommunications equipment manufacturers.
Being a front runner, beyond huge sales volumes, means that China will provide a testbed of advanced 5G technology that Ericsson and Nokia can use as they expand their networks around the world.
Ericsson, a leading supplier of Chinese gear for previous-generation communications technology, is bold to win domestic contracts, including a 1.3 billion crown ($ 152 million) hit due to write-downs in product inventories. I took a big step.
The write-down is generally recovered as the company sells additional equipment to cover the loss in the long run, but the loss becomes more pronounced if you lose a future contract.
“The interesting thing about bandwidth is that it’s addictive. If you get it, you want more. Massive data consumption in China will drive future technology needs.” Said Ekholm.
“Now we need to make sure we get the volume back not only in China, but elsewhere.”
By Supantha Mukherjee
