With the geopolitical situation between the US and China escalating to new heights, US interest in Nokia and Ericsson is climbing
Earlier this week, the Federal Communications Commission fired its latest shots across Huawei’s bow, designating the Chinese company and fellow vendor ZTE as ‘security threats’ and further driving a wedge between the US and China when it comes to 5G.
Beyond the obvious political ramifications of this decision, the constantly growing tension is creating a serious issue for the US when it comes the next generation technology. China has bet heavily on 5G, having rolled out the technology on a far greater scale than the US, as well as claiming prominence in technology itself. Without the help of Chinese companies, how can the US hope to compete in this technological battlefield?
One solution posited by US Attorney General William Barr back in February was for the US to simply buy one of Huawei’s leading competitors, such as Nokia or Ericsson. While this suggestion seemed somewhat ludicrous at the time, and was quickly maligned by US vendor Cisco, US interest in the two Nordic companies has not gone away. According to a report in the Financial Times, senior Finnish business executives fear that major US companies such as Cisco or Google could be looking to swoop in and take a large minority stake in Nokia, which has struggled to keep up with competition in the early days of 5G and is somewhat financially vulnerable.
The US likely have their eye on Ericsson too, with major investor Cevian suggesting that the Swedish giant should consider potential investments from the US very seriously.
But the two Nordic powerhouses may not, in fact, be where the answer lies for US 5G. Perhaps they should not look to Europe, but to Asia.
A whole host of Japanese companies have been making waves when it comes to 5G recently. Rakuten Mobile is perhaps the poster boy in this regard, championing Open RAN, but many other companies such as NEC Corporation and NTT are also making progress in 5G. Hitachi is working with Nokia on private 5G networks, with Mitsubishi is also doing work along similar lines. Just days ago, Fujitsu made a deal with burgeoning US operator DISH to provide 5G radio units.
This progress has not gone unnoticed by the telecoms community. In a LinkedIn post commenting on the recent move by NTT to acquire a $600 million stake in NEC, Dean Bubley of Disruptive Analysis noted a “quiet resurgence of Japanese tech firms, especially for 5G and O-RAN”.
“NTT taking a stake in NEC […] seems to be an attempt to catalyse creation of a Japanese equivalent to Huawei,” said analyst. “Overall, Japan seems likely to be much more important in 5G than it was in 4G.”
Much like the US, Japan has been intensifying its campaign to incentivise domestic companies to develop self-reliance when it comes to 5G. While none of these companies will be replacing the international 5G might of Ericsson or Nokia any time soon, their steady progress certainly marks Japan as a country to watch when it comes to 5G.
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