Ericsson warns of China retaliation following Sweden’s Huawei ban

Ericsson’s sales are up after a Swedish telecommunications equipment maker warned that Sweden could be retaliated for banning Chinese rival Huawei from building 5G networks in Scandinavian countries. It plummeted in China.

Revenues generated in Asia’s largest economy in the second quarter fell from 4.1 billion SKr ($ 470 million) a year ago to 1.5 billion SKr, and Ericsson’s group-wide sales fell for the first time in three years. Did.

CEO Borje Ekholm warned that the group could gain “significantly lower market share” in China in the future as a result of the following: Swedish decision Last year, Huawei and ZTE were banned due to concerns about espionage and technology theft.

Ericsson and many of its rivals are in the midst of a geopolitical struggle for the future of 5G networks. The United States pressures its allies to follow its leadership, Ban Chinese companies From their communications network, officials in the administration of former President Donald Trump have highlighted the idea of ​​buying shares in Huawei’s two major rivals, Ericsson or the Finnish group Nokia.

But Echom His criticism We told the Financial Times last year about Sweden’s 5G ban to limit free competition and trade.The Wallenberg family, a large investor in Ericsson and other Swedish stocks Criticized the decision In fear that fallout from the ban could spread to other sectors.

Some analysts are not making future profits for Ericsson in China. Friday’s Ekholm warned that Huawei’s Swedish ban “may affect market share awards.” Many are scheduled for later this year.

Ericsson Indicated What it missed by upgrading its forecasts for the Chinese telecommunications equipment market said it would increase 11% this year from 4% in previous estimates. This will increase global growth from the previous 3% forecast to 10%.

The Swedish group also emphasized that it made 10 billion SKr revenues in China in the second half of 2020 and emphasized the scale of what it could lose.

The struggle in China came from a slight decline in second-quarter sales from 55.6 billion SKr in the year-ago quarter to 54.9 billion SKr. It missed the average analyst prediction of SKr572bn.

Ericsson was also disappointed with earnings as the underlying operating profit rose from 4.5 billion SKr to 5.8 billion SKr, below analysts’ average forecast of 6 billion SKr.

Group stocks fell 8 percent in early Friday trading.