An upcoming court decision will determine Huawei’s future status in Sweden and could likewise be a turning point for the ambitious Ericsson in China.
The case stems from the Swedish government’s decision last October to ban Huawei from supplying 5G equipment due to security concerns. Huawei is suing to overturn that decision, and a court ruling is expected in the next few weeks.
European governments have been tightening their grip on Chinese companies building 5G networks after diplomatic pressure from Washington. Huawei, for its part, has repeatedly denied allegations that its equipment is being used as a spying tool by Beijing.
China has previously asked Sweden to “correct” the Huawei ban, and this month issued a suggestive warning that it could retaliate against Ericsson.
The Global Times, an affiliate of the Communist Party newspaper People’s Daily, said on May 10 that while Ericsson had been invited to participate in China’s 5G equipment tests, that did not mean it would be chosen. The newspaper said Sweden must carefully reconsider its policy toward China.
An Ericsson spokesman confirmed that the company has been invited to participate in China’s 5G tests. Ericsson won 5G contracts from three major Chinese operators last year.
Analysts have been warning of the risk of retaliation from China, and Ericsson CEO Börje Ekholm recognizes such a risk. He said last month in response to a question about diplomatic tensions between Sweden and China that there are always risks involved in bidding in different countries. Before that, he had criticized the Swedish government for restricting Huawei’s participation in free competition.
Kenneth Fredriksen, Huawei’s executive vice president for Central and Eastern Europe and Northern Europe, said, “This is a test of Sweden’s credibility, and we are confident that we will get justice in court.”
The potential injunction Ericsson faces could help Nokia. Nokia has yet to win any 5G business in China.
Nokia CEO Pekka Lundmark told Reuters last month that they have yet to make a breakthrough in China for 5G, but did not rule out the possibility in the future.
Finland, where Nokia is based, has not completely banned Huawei, although its parliament passed a law allowing it to ban the use of Huawei equipment for national security reasons.
A Nokia spokesman said the company has completed 5G tests in China.
China has been ahead of other countries in rolling out 5G and is a lucrative market for telecom equipment makers. Research firm EY estimates its 5G capital spending will reach $223 billion between 2019 and 2025.
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