Ericsson announced plans to increase its investment in the US, in order to support growing demand for 5G equipment in the region. In addition to increasing R&D staff, the Swedish company plans to start manufacturing in the US before the end of this year.
The US is Ericsson's largest market, accounting for a quarter of its business in the last seven years. As US operators expect to launch the first 5G services by the end of 2018, Ericsson is hoping to gain a greater share of the market by moving closer to potential customers. The company said the investments should shorten the time for new product introductions and delivery to customers and allow the company to recruit new expertise from the US. No financial details of the plans were disclosed.
The move may also be an attempt to play into the 'America-first' sentiment of the current US government, which has been pushing manufacturers to invest more in US operations, under threat of possible international trade sanctions. The US backlash against Chinese manufacturers Huawei and ZTE, which are suspected of collaborating with Chinese state security, also opens the door for European players like Ericsson to gain business by promoting their presence on the ground in the US.
150 million 5G subscribers in 2023
According to Ericsson's latest mobility report from June, nearly half of all mobile subscriptions in North America will be on 5G in 2023, equal to 150 million 5G subscribers. The company already has agreements to work with all four major mobile operators in the US on developing 5G, but faces tough competition from rivals Nokia and Samsung for the first major 5G market.
Ericsson's former CEO Hans Vestberg also recently took over as CEO of Verizon, the US's biggest mobile operator.
Radio R&D, AI investment
The R&D investments in the US will include building out the ASIC Design Center opened in Austin, Texas in late 2017, which focuses on core microelectronics of 5G radio base stations. The site will work on accelerating the path to 5G commercialization and have 80 employees once fully staffed.
Ericsson will also open a new software development centre with baseband focus in 2018, employing more than 200 software engineers once fully operational. This facility will further strengthen Ericsson’s 5G software development.
Beginning in 2019, both of these facilities will introduce 5G products and software features into the Ericsson portfolio, and will be available for customers globally, including in the US.Additionally, Ericsson will increase its investment in artificial intelligence and automation, employing around 100 specialists in North America by the end of 2018. This team will work on using AI technologies to accelerate automation, examine product road maps and explore new business opportunities. They will focus on boosting the company’s current portfolio, strengthening customer engagements and promote innovation of new disruptive business opportunities.
Special US product team and manufacturing
To increase flexibility in bringing new products into the market, Ericsson will recruit a dedicated team to work specifically on introducing products for the US market, conducting production engineering, testing/integration and supply preparations on early prototypes. This will be done in close collaboration with US-based R&D resources, the company said.
To make 5G products available to customers as fast as possible, Ericsson will also begin manufacturing in the US in the fourth quarter of 2018. This will enable Ericsson to operate closer to customers, providing volume production of next-generation radios and the fast introduction of new products into the US market. Initially, Ericsson will work with a production partner and the first radios for the US will be produced before the end of 2018.
