Ericsson in jeopardy in China due to Sweden’s Huawei ban

An upcoming court decision will determine Huawei’s future in Sweden, and could also be a potential turning point for Ericsson’s ambitions in China.

The case stems from the Swedish government’s decision last October to ban Huawei from supplying 5G equipment due to security concerns. Before this move by the Swedish government, Huawei has taken to the court to overturn the decision and is expected to have a ruling in the next few weeks.

Ericsson is in jeopardy in China due to Sweden’s Huawei ban

European governments have tightened controls on Chinese companies building 5G networks following diplomatic pressure from Washington, which alleges Huawei equipment could be used by Beijing for espionage. However, Huawei has repeatedly denied these allegations.

Earlier, China had asked Sweden to “immediately correct its mistake” when it banned Huawei and issued a warning that it could take retaliatory action against Ericsson.

According to the Global Times, a newspaper controlled by the Chinese Communist Party said on May 10 that, although Ericsson has been invited to participate in 5G equipment trials in China, it That doesn’t mean they will be assigned to deploy the network. The newspaper said that Sweden must review its policy towards China carefully.

An Ericsson spokesperson confirmed that the company has been invited to participate in 5G trials in China. Last year, Ericsson won 5G contracts from all three major mobile operators in China and brought in about 10% of revenue.

Analysts have also warned of the risk of Chinese retaliation and Ericsson CEO Börje Ekholm has acknowledged this concern.

When asked about the diplomatic tension between Sweden and China last month, Börje Ekholm said: “There is always a risk that we are affected in auctions in different countries.”

An Ericsson spokesman declined to comment further on the matter.

Meanwhile, Kenneth Fredriksen, Executive Vice President of Huawei, Central Eastern Europe and Northern Europe said: “This is a test of Sweden’s reliability and we believe we will be treated. justice in court”.

A potential ban on Ericsson could be a shot at Nokia, the company has yet to win any 5G contracts in the Chinese market.

“We have not yet made a breakthrough in 5G in China, but of course we do not rule out that possibility in the future,” Nokia CEO Pekka Lundmark told Reuters last month.

Nokia’s home country, Finland, hasn’t banned Huawei outright, although its parliament has passed a law allowing the banning of equipment by manufacturers for national security reasons.

A Nokia spokesperson said the company has completed 5G trials in China.

China has been ahead of other countries in 5G deployment and is a lucrative market for telecom equipment manufacturers. Research firm Ernst & Young (UK) has estimated that China’s 5G investment costs will reach 223 billion USD in the period 2019-2025.

Phan Van Hoa (according to Channelnewsasia)

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