Ericsson fears China losses as a result of Sweden–Huawei row

In October 2020, Sweden’s regulator banned Huawei and ZTE from taking part in the nation’s upcoming 5G networks. Huawei quickly responded with a legal challenge, the process of which has dragged on for many months. A final decision on the case is expected to be delivered in the next few weeks. 

 

Since the ban’s announcement at the start of the year, Huawei’s rival Ericsson has curiously lent its support to overturning the decision, with CEO Borje Ekholm being especially vocal. Ekholm has argued that the ban represents an affront to free competition and trade, as well as serving to further fragment the 5G market and hampering innovation.

 

But, of course, this is not the full story for Ericsson. As so often with 5G in the past few years, the Swedish Huawei ban could have serious geopolitical ramifications, with the Chinese government previously threatening economic reprisals against Swedish businesses in China if the ban were to go ahead. 

 

China is a major market for Ericsson, where it currently enjoys a market share of around 12%.

 

Now, in an updated prospectus for investors related to a €500 million unsecured 8-year bond being issued by Ericsson, the vendor has suggested that major losses in the Chinese market could indeed come to pass as a result of the ban.

 

“It is the company’s current assessment that the risk has increased that Ericsson will in those tenders be allocated a significantly lower market share than its current market share,” said the statement.

 

The company said it had been invited to various tender processes in China, but the results are still unannounced. They once again reiterated their position that the ban would have a fragmenting effect on the global 5G value chain and could potentially contribute to the development of divergent mobile standards.

 

In related news, the media last week reported that the Dutch government had quietly instructed the nation’s operators to exclude Huawei from the core of their 5G networks. The specifics of the government’s stipulations are being kept secret, however, with the only information available being a Huawei spokesperson confirming that “we do not supply 5G core equipment in the Netherlands.”