Ericsson to axe modems and cut jobs

Swedish telecom giant Ericsson has confirmed it will cut jobs in Sweden and abroad after the company announced on Thursday morning it would stop developing modems.

Ericsson to axe modems and cut jobs
Ericsson CEO Hans Vestberg, pictured here presenting the comapny's quarterly report in July. Photo: Annika af Klercker/TT

The decision will affect some 1,600 jobs in 14 countries, including almost 700 in Sweden, and will lead to redundancies, according to chief executive Hans Vestberg.

“Yes, I think so, absolutely,” Vestberg told news agency TT.

“I have to be honest about it. How many exactly is difficult to say.”

The majority of those affected are employed in Lund, said Vestberg. He added that a new investment by Ericsson in radio networks meant some 500 people would be recruited to work on research and development in the southern city.

The group said in a statement that it would "discontinue future development of modems" but that some of the 1,582 employees affected could be redeployed to new jobs in research and development for radio networks.

The decision marks a strategic shift for Ericsson, following an evaluation of the global modem market which the company said was subject to "strong competition, price erosion and an accelerating pace of technology innovation".

Ericsson took over the production of LTE thin modem's — which smartphones use to access the Internet — after the breakup of a joint operation with the French-Italian microchip manufacturer STMicroelectronics in August 2013.

The company launched its own modem a year later which it will continue to produce.

"The market has fallen. There are fewer and fewer mobile phone makers who buy separate modems — they buy them together with the processors, and we don't have processors," Ericsson's chief executive Hans Vestberg told TT.

"Instead we have decided to focus more on our core business, where we are strongest, and that is radio (wireless) technology."

The company plans to expand its research and development activity in radio networks, particularly within "small cells" — low powered transmitters for mobile phone data networks — creating about 500 jobs.

Ericsson currently employes 1,582 in its modem operations in Sweden, India, Germany, China and Finland.

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Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.