Ericsson suffered further reductions in its business China and began to feel the heat of supply chain issues in Q3, though it booked increased profit on improved margins and gains across the rest of its footprint.
In its earnings statement CEO Borje Ekholm remarked Ericsson planned to adapt its sales and delivery organisation in China as a result of its reduced market share [1], with the company set to incur related restructuring charges for the effort, which begins in the current quarter.
Revenue in China fell SEK3.6 billion ($418.7 million) compared with Q3 2020, though the majority of this was offset by gains elsewhere.
Ericsson’s issues in China have been well publicised [2], with the company suffering dwindling share of 5G tenders during a row between Swedish authorities and Huawei [3] over a decision to ban it and ZTE from supplying 5G equipment.
Last month, Ericsson revealed plans to close one of its Chinese R&D centres, but subsequently denied this was due to its loss of share from local operators [4].
In an interview with Mobile World Live, Ericsson head of business area Networks Fredrik Jejdling emphasised the company remained committed to China. “We’ve been there a very long time and intend to fight with all we can, with technology and all possible measures to fight back and be in a stronger position”.
Gains
Ericsson highlighted gains across the rest of its footprint, specifically sales of its 5G equipment and contracts in place with the three tier-1 US operators, which it described as the largest in its history.
Jejdling added it had recorded continued growth in Europe and Latin America, both in replacing equipment from other vendors and new sales, taking its networks market share to “around 39 per cent” globally excluding China.
In its statement, Ericsson noted while it mitigated global supply chain issues in H1 2021, in late Q3 it had experienced “some impact on sales from disturbances in the supply chain” warning these could “pose a risk” going forward.
Jejdling noted issues included access to components, production delays, and transport and logistics problems, which are being experienced globally across a number of sectors and markets.
Revenue fell 2 per cent year-on-year to SEK56.3 billion as its decline in China and supply chain issues hit its top line. Net income was up 4 per cent to SEK5.8 billion.
[1] https://www.mobileworldlive.com/featured-content/home-banner/ericsson-nokia-miss-china-mobile-2b-5g-tender
[2] https://www.mobileworldlive.com/featured-content/home-banner/ericsson-frets-over-china-market-share
[3] https://www.mobileworldlive.com/featured-content/home-banner/ericsson-warns-on-china-reprisal-risk-from-huawei-ban
[4] https://www.mobileworldlive.com/featured-content/home-banner/ericsson-downplays-china-rd-site-closure
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