WSJ: US considers forcing Nokia & Ericsson to manufacture gear outside China for domestic market
|5G is one of the key areas in the ongoing US-China trade war and network infrastructure companies like Huawei, Ericsson and Nokia are at the center of all decision both sides are and could make, especially Huawei that also has a strong consumer business. The recent report from the Wall Street Journal gives credibility to Telegraph’s report that Nokia and Ericsson are planning an emergency supply chain split in case of further trade war escalation. As the WSJ reports, the US government is considering a bill that could trigger European network gear makers’ emergency plans.
WSJ’s sources inside the US government state that “the Trump administration is examining whether to require that next-generation 5G cellular equipment used in the U.S. be designed and manufactured outside China.” This bill is still in early stages, but the report gives credibility to news that Nokia and Ericsson are planning such scenario. Such a restriction could cause disruptions and require further investments from telecom companies in moving the supply chain.
The article mentions that “Citi analysts Amit Harchandani and Robert Lamb estimate China represented 45% of Ericsson’s manufacturing-facility area and 10% of Nokia’s in 2018.” Nokia looks in a much better situation than Ericsson by just looking at the manufacturing share analyst mention, but we cannot really know what an impact such a decision from US could have.
Spokesmen for Ericsson and Nokia declined to comment on any discussions with the U.S. government. The Ericsson spokesman said the company’s strategy is to manufacture products close to its customers and that it has flexibility to move manufacturing to sites in the U.S., China, Brazil, Estonia and India. The Nokia spokesman said its manufacturing strategy can “mitigate against risks such as local disruptive events, transportation capacity and political risks.” – WSJ report
Both Nokia and Ericsson are European companies and thus far the EU as a whole didn’t really get involved in the US-China trade war, even though it impacts domestic companies.
Source: WSJ