Ericsson leads 5G as Huawei hit

The Trump administration’s aggressive effort to cripple China’s Huawei has given Ericsson the opportunity to lead the 5G rollout.

An engineer installs Ericsson 5G equipment in Switzerland. Picture: Bloomberg

The Trump administration’s increasingly aggressive effort to cripple China’s Huawei Technologies has presented Ericsson the opportunity to lead the rollout of 5G technology around the world.

The Swedish company is emerging as the steadiest player in the $US80bn-a-year cellular-equipment industry, telecommunications executives and analysts say, because it makes a technically advanced product that one rival, Nokia, was late to develop and that Huawei may not be able to make in the future because of recent US measures.

While its competitors try to recover, Ericsson is moving forward after a costly years-long restructuring has returned it to profitability. “The first step is for sure accomplished,” chief executive Borje Ekholm said. “The next step is to find longer-term growth for the company.”

The question for Ericsson is figuring out which technologies of tomorrow to bet on. Ericsson is testing equipment in several fields that 5G’s super-fast wireless speeds promise to unlock, such as driverless cars and remote-control mining machinery.

Washington is lobbying foreign countries to ban Huawei, saying Beijing could direct the company to spy on or sabotage communications. Both Huawei and Beijing say that wouldn’t happen. Some foreign governments and wireless carriers have resisted American pressure, saying Huawei sells high-quality, low-cost 5G equipment.

Some European governments say their cybersecurity agencies closely monitor telecom networks and can manage risks.

The Trump administration last month stepped up efforts to hamper Huawei by imposing export restrictions that make it harder for the company to buy computer chips that are produced using US-designed tools — a move that could prevent it from manufacturing advanced 5G hardware.

The US has also sought to boost Huawei’s rivals by providing loans to wireless carriers in developing countries so they can buy equipment from non-Chinese suppliers, among other moves.

US Attorney-General William Barr in February suggested that the US government take a financial stake in Ericsson or Nokia, or both, to “make it a more formidable competitor and eliminate concerns over its staying power”. The White House quickly backed away from the idea; a senior Trump administration official says it favours a free-market approach.

Mr Ekholm declined to say whether Ericsson has held discussions with the US about a potential government stake. Ericsson provides equipment for all three major US carriers: AT&T, Verizon Communications and T-Mobile US.

The Stockholm-based company has been a telecommunications mainstay since Lars Magnus Ericsson founded it as a telegraph-repair workshop in 1876. It manufactured wooden phones in its early days and later made cellphones before selling its share in a joint-venture to partner Sony in 2011.

Ericsson struggled in the cellular-equipment industry against China’s Huawei and ZTE, which sold comparable products, often at lower prices.

When Mr Ekholm became CEO in 2017, he concluded the company had spread itself too thin and should focus on making wireless equipment.

Among its key innovations are cellular antennas. Ericsson’s use a new technology, called massive multiple-input multiple-output, or massive MIMO, that sends wireless signals in strong jets to different devices.

Typical cellular antennas, which sit on steel towers or rooftops, send wireless signals in a wide cone, similar to the way a garden hose sprays water.