Beijing shuns Ericsson and Nokia as the West puts the brakes on Huawei

China Mobile Ltd., a government-owned wireless operator that is the world’s largest in terms of subscribers, awarded 5.4% of its latest 5G equipment tenders in July to non-Chinese suppliers, against 11% in his previous round in 2020.

The biggest loser was Sweden’s Ericsson AB, who after winning all that 11% last year, fell to just 1.9% in this round. A state-controlled Chinese media outlet called the loss of market share in retaliation for Sweden’s decision to ban Huawei and Chinese company ZTE Corp. of its 5G networks.

China Mobile representatives did not respond to a request for comment.

Just as the internet is divided between a heavily censored Chinese site and one run by American companies, so too is the infrastructure behind it.

The global $ 35 billion cellular equipment market can be divided into three roughly equal sized segments: China, the United States, and the rest of the world. China is increasingly relying on Chinese equipment. The United States has effectively banned Huawei, the world’s largest cellular equipment maker, from major networks for years, fearing Beijing could exploit the company to spy. Huawei and Beijing say the concerns are unfounded.

Much of the rest of the world is following Washington’s lead. There are big exceptions, like Germany. Countries that have adopted or are considering restrictions against Huawei account for more than 60% of the global cellular equipment market, according to research firm Dell’Oro Group. Outside of China, Ericsson and the Finnish Nokia Corp. win contracts at Huawei’s expense.

“In the current trajectory, the telecommunications industry appears to be increasingly polarized between East and West,” said Simon Leopold, telecommunications analyst at Raymond James.

In a tender valued at around $ 6 billion, China Mobile attributed about 60.5% of the value to Huawei, up from 57.7% last year. It sold 31.2% to ZTE and 2.8% to the smaller Chinese supplier Datang Telecom Group. Nokia won the largest share from a foreign company, at 3.5%.

In 2020, Sweden explicitly banned Huawei and ZTE from supplying its 5G networks, going beyond their European counterparts who placed restrictions on Chinese companies without naming them. Chinese officials have warned they could retaliate against Ericsson, prompting chief executive Börje Ekholm to pressure officials in the Scandinavian country to reconsider the ban.

The Global Times, a newspaper published by the ruling Communist Party in China, said this month that Ericsson’s poor performance at China Mobile auctions was “linked to the Swedish government’s arbitrary crackdown on Huawei and others. Chinese enterprises “.

Days before China Mobile announced the winners of the 5G equipment contracts, Ericsson said it lost $ 300 million in second-quarter sales in China from a year earlier. Mr Ekholm told analysts he was not exactly sure the reason for the surprising loss, but predicted that Ericsson would not get it back.

In an interview on Tuesday, Mr Ekholm said it was positive that Ericsson got a fragment of China’s latest equipment tender, rather than zero, and that the company would try to increase its share of market in future tenders there.

He said the Chinese market matters not only for its size, but also because Ericsson can learn by participating in the world’s most aggressive 5G deployment. “We have to be there,” he said.

Nokia’s allocation of around 4% was an improvement after it was excluded from the tender for China Mobile’s 5G cellular equipment in 2020, while it was still recovering from a mistake in the purchase of chips that made its equipment more expensive and less attractive to wireless operators. Some analysts said it was a surprise and a disappointment that Nokia did not take Ericsson’s full market share in the latest tender.

The small market share means Ericsson and Nokia will miss the world’s most aggressive 5G rollout most of the time this year. China’s Vice Minister of Industry and Information Technology said in July that the country has built 916,000 5G cell sites, which is about 70% of the global total, and aims to have 560 million subscribers. 5G wireless by the end of 2023.

As Chinese networks come to an end around 2023, restrictions on Huawei outside of China will increasingly benefit Ericsson and Nokia, as Europe and other parts of the world accelerate 5G deployment Raymond James’ Mr. Leopold said.

Ericsson and Nokia both profited from Huawei’s woes. Nokia CEO Pekka Lundmark said earlier this week that the Finnish company had won around half of the potential deals resulting from the change in supplier of wireless carrier equipment for “political reasons.”

Nationalism is not new in the telecommunications space. Two decades ago, the United States preferred Lucent, Canada preferred Nortel and France preferred Alcatel, Leopold said. The three had a hard time, in part because Huawei and ZTE started selling competitive products at lower prices and ended up being absorbed by Ericsson or Nokia. These companies are Huawei’s only major Western rivals today.

Ericsson had a market share of over 25% in China as recently as 2011, but it has fallen since. The European Union and China struck a handshake deal in 2014 to reserve around 25% of China’s telecommunications equipment market for Ericsson and Nokia, but it was never implemented.

Since then, with the United States not having its own major industrial player, Washington has tried to support Nordic companies as well as Samsung Electronics Co. Ltd. by offering loans to induce developing countries to buy non-Chinese telecommunications equipment. The United States has also used export controls that prevent Huawei from purchasing the supplies it needs for its products.

This story was posted from a feed with no text editing

To subscribe to Mint newsletters

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now !!

Source link

About Wanda Dufresne

Check Also

The Californian valley where Arabian date palms bloomed

LONDON: The British armed forces have been called on to support efforts to collect data …

Leave a Reply

Your email address will not be published. Required fields are marked *