As 5G has increasingly become a geopolitical issue, Ericsson is warning it will likely be caught in the crossfire in China.
Countries around the world are racing to deploy 5G networks. Once one of the leading equipment providers, Chinese firm Huawei has been under siege for the last couple of years as the US and its allies have leveled sanctions against the company, accusing it of being a national security risk.
One of the countries that banned Huawei from participating in its 5G networks is Sweden, the home country of Ericsson. Huawei challenged the ruling, but lost on appeal.
Ericsson is now warning that Beijing may retaliate, excluding the company from participating in 5G network deployments in China. Even if Ericsson is allowed to participate, it does not believe it will maintain the same market share as in times past.
While Ericsson is invited to various ongoing tender processes in China, the final outcome remains uncertain and 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.
The company sees the issue having “a material and potentially lasting adverse impact on our business, including sales, market share, market access and supply chain and R&D activities, our financial condition and results of operations.”