Mobile Devices

5G contracts help Ericsson offset losses in China, chip shortage

20 October 2021

Strong sales of 5G equipment helped Ericsson absorb losses from the ongoing chip shortage and geopolitical issues resulting in loss of market share in China.

Ericsson was able to secure all 5G contacts from all three top U.S. carriers — Verizon, AT&T and T-Mobile. However, despite this, the company’s revenue dropped 2% to $6.53 billion.

“Through continuous measures for global supply chain resilience, we avoided customer impact during the first half of the year,” said Börje Ekholm, president and CEO of Ericsson. “However, late in Q3 we saw some impact on sales from disturbances in the supply chain, and such issues will continue to pose a risk. While we continued to gain share in a growing market, the expected sales reduction in Mainland China, lower variable sales in managed services and some supply chain disturbances, led to a negative organic sales development of -1%.”

The company said it is beginning to see revenues from 5G contracts driving core businesses and the company will continue to invest in R&D for 5G portfolio including core network and orchestration.

Due to the geopolitical issues with China, Ericsson said it would “resize” its sales and delivery organization beginning in the fourth quarter resulting in restructuring charges.

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