Ericsson warns of repercussions in China after Swedish Huawei ban

Swedish telecoms firm Ericsson has seen its sales in China plunge and has warned that the company will face retaliation in the country because of Sweden's decision to ban Huawei from building 5G networks.

Ericsson saw its revenues in China this year fall to SKr 1.5 billion (€146 million) from SKr 4.1 billion (€400 million) last year, causing the company's overall sales to drop for the first time in three years.

CEO Borje Ekholm warned that the company would probably face a "materially lower market share" in Asia's largest economy in the near future because of Sweden's decision to block Huawei and ZTE over espionage and technology theft concerns.

Read more: Huawei appeals ban from Sweden's 5G networks

Ericsson and several of its competitors have become caught in the middle of a geopolitical struggle over 5G networks. The US has been applying pressure on its European allies to follow its lead and bar Chinese companies from telecoms networks. At one time, officials in the administration of former president Donald Trump were even considering buying stakes in Ericsson or Finland's Nokia, the two main competitors of Huawei.

Ekholm has been an outspoken critic of the Swedish 5G ban on Huawei. In an interview with the FT last year, he said that the decision would restrict competition and free trade. One of Ericsson's biggest investors, the Wallenberg family also criticised the decision amid concerns that the ban's fallout would embroil other sectors.

Some analysts are even predicting that Ericsson will see no future revenues in China. Last week, Ekholm said the Swedish ban "might influence market share awards", due later this year.

Read more: BT begins removing Huawei tech from 5G networks in UK

The company also released an upgraded forecast for the telecoms equipment market in China which showed a projected 11% growth this year, up from a prior estimate of 4%. Ericsson also highlighted just how much it stood to lose, underscoring the SKr 10 billion (€975 million) it made in China in the second half of 2020.

Its problems in China come as it reported Q2 sales that were down slightly on the same period in the previous year.

Shares in Ericsson dropped 8% in early trading on Friday.

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