Ericsson cuts operations in China due to Huawei

Sweden’s Ericsson has announced plans to reduce its operations in China after experiencing a significant drop in sales in one of its largest markets due to retaliation for Sweden’s ban on China’s Huawei from selling 5G equipment in the country.

The news came as the company reported better-than-expected core earnings for the third quarter buoyed by strong sales of 5G equipment in most parts of the world, offsetting a loss of market share in China and global supply chain problems.

Sweden banned China’s Huawei from selling 5G equipment in the country a year ago, and Ericsson has since lost most of its stake in China’s latest telecom bidding round.

And the company’s chief financial officer said that the percentage of revenue that Ericsson earns from China has fallen to about 3 percent of the total 11 percent, which offset the gains made by the company at a time when it compensated for the void left by Huawei in many countries where it retreated under pressure from the government. American.

The decline began in the second quarter, and appears as a loss on an annual basis during the same period next year. China’s sales fell by 3.6 billion Swedish crowns ($418.14 million) in the third quarter alone.

The company now plans to reduce sales in the country. The reduction in China represents a small setback for the company that has been operating in the country for more than a hundred years. The CEO pledged last month to redouble efforts to regain market share in China.

Read also: Ericsson sues Apple in a 5G patent dispute

Ericsson loses in China because of Huawei

Ericsson, a competitor to Nokia, said global supply chain problems were emerging. Late in the third quarter, the company saw some impact on sales from disruptions in the supply chain, and such issues remain a risk.

The company was unable to deliver certain devices to its customers due to a lack of chips from suppliers, as well as logistical problems. This led to a decrease in revenue.

Quarterly operating profit rose to 8.8 billion Swedish crowns ($1.02 billion) from 8.6 billion a year earlier. Exceeding average expectations of 7.85 billion.

Securing 5G contracts from all three US carriers helped the company absorb losses in China. Total revenue fell 2 percent to 56.3 billion crowns, missing analyst expectations of 58.14 billion crowns.

Read also: Ericsson sues Samsung over patents

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