Ericsson and Nokia are undergoing a process of Americanization in response to Trump’s economic policies and Europe’s unfriendliness.
Ever since American wireless pioneers such as Bell Labs, Lucent and Motorola were swallowed in the consolidation of the early 2000s, the US has been troubled by its diminished status in mobile. The country that popularized the touchscreen and invented the modem is notably home to the likes of Apple, the world’s most famous smartphone brand, and Qualcomm, which arguably holds the most valuable 5G patents. But it is missing a big manufacturer of mobile network equipment.
The tens of thousands of basestations that carry signals to American phone users are nearly all built by three foreign companies. Europe is represented by Ericsson of Sweden and Finland’s Nokia, the owner of various formerly American assets, with the Asian corner occupied by South Korea’s Samsung. To many in the US, the criticality of 5G has made that increasingly irksome.
During the first Trump administration, certain industry and political figures believed the US could stage a comeback through the concept of open radio access network (RAN) technology. The idea was to replace proprietary with standard interfaces, thereby helping US RAN specialists to link arms and offer an alternative to the foreign giants. But open RAN hopefulness has not produced any significant US players. Under Trump 2.0, the focus has shifted. If Ericsson and Nokia, the dominant RAN vendors outside China, could not be beaten, they could possibly be Americanized.
MAGA, a different way
This different approach still suited Trump’s MAGA agenda. Nor did it have to entail a full takeover of companies that have not been the most attractive targets in a shrinking 5G market. Regardless, Ericsson and Nokia would have been difficult to acquire due to European obstacles, both corporate and political. Instead, the threat of tariffs, the Trump administration’s most visible weapon, has forced change at companies rendered vulnerable by their huge exposure to the US.
That is partly the fault of Europe and its regulators, which have not made the old continent a very hospitable neighborhood for Ericsson and Nokia, as their bosses have frequently complained. A mishmash of comparatively weak European telcos spends pathetically little on network products. Chinese vendors, accused of benefiting from Chinese state aid, are still allowed to roam free in many European countries. To critics, it seems as if Europe is trying to drive away two of the only big technology developers it has.
Europe’s stinginess and China’s hostility to foreigners have left the Nordic vendors heavily reliant on the US for their income. That is especially evident at Ericsson, which owes 43% of the revenues it has generated so far this year to American customers. The US is also one of the world’s most profitable mobile markets, Ericsson executives have acknowledged.
That was seemingly illustrated by Nokia’s loss of a big mobile contract with AT&T, previously thought to account for between 5% and 8% of its mobile revenues. Two years ago, before that loss was revealed, the operating margin at Nokia’s mobile networks business group was 6% for the first three quarters. The equivalent this year is minus 1.2%, making the unit unprofitable. Today, Nokia generates about 31% of its revenues in North America, a much lower percentage than Ericsson. But it has identified US data center companies as one of its main growth opportunities.
Worried about dependency on Asian components and factories outside the US, the Nordic vendors have been overhauling their supply chains and producing as much as they can at US facilities. The most recent example of this came last week when Nokia announced it would invest $4 billion in the US for research and development (R&D) and manufacturing.
Over what period was not clarified, with Nokia spending about €4.5 billion (US$5.2 billion) on R&D alone in 2024. But it was still a prioritization of the US over other regions, building on the $2.3 billion that Nokia spent to acquire Infinera, a US developer of optical equipment, in February. It followed Nokia’s warning earlier this year that tariffs would reduce this year’s operating profit by €50 million ($58 million) to €80 million ($93 million). At the midpoints of its ranges, that is about 3% of what it currently expects to make. “Nokia’s $4 billion investment is another Trump administration win for America,” crowed Howard Lutnick, the US Secretary of Commerce, in Nokia’s statement.
Ericsson has similarly upped investment in US facilities, opening what it calls a 5G “smart factory” in Lewisville, Texas, more than five years ago. The highly automated plant was always intended to be where Ericsson would manufacture all the products sold to its American customers. The current tariffs regime has made local production imperative.
If all that has helped reduce what the Nordic vendors must import from overseas into the US, there remains a dearth of American options for numerous components such as printed circuit boards. Higher costs blamed on tariffs would need to be either absorbed by Ericsson and Nokia or passed on to their customers. And there is no evidence yet that local investments by the companies have returned jobs to the US. Ericsson cut North American headcount by 8% or about 800 jobs last year. Nokia’s shrank by 1,100 jobs, almost 11%.
Out with the Europeans
Americanization, nevertheless, has been gathering momentum. Börje Ekholm, Ericsson’s CEO since 2017, has an American family and dual citizenship of the US and Sweden, spending much of his working time at a US residence in Colorado. He upset many Swedes last year with reported comments about relocating Ericsson’s headquarters to the US unless business and regulatory conditions improve in Europe.
In January, he was criticized in the Swedish press for donating 5.5 million Swedish kronor ($580,000) of Ericsson’s money to Trump’s presidential inauguration. Ericsson also appeared to pare back any references to diversity, equity and inclusion – too woke for Republicans – in its latest annual report. The previous one had a full section called “diversity and inclusion,” but that and other commentary on the topic are absent from the 2024 edition.
At the same time, Nokia has embarked on a Trump-pleasing campaign to make itself appear less European and more American. Early in the year, it appointed its first-ever American CEO, Justin Hotard, who previously held executive roles at Intel and HPE. Besides channeling investment into US facilities, he has installed David Heard, another American and the former boss of Infinera, in the group leadership team (GLT) as head of network infrastructure, Nokia’s largest business group.
Then, as part of the restructuring it announced last week, Nokia revealed that Tommi Uitto, the long-serving Finnish president of its mobile networks business group, will leave the GLT at the end of this year. Hotard is assuming responsibility for a newly created mobile infrastructure group until a permanent head is found. If that person were based in the US, where Nokia is determined to reclaim lost mobile territory, it would come as no surprise.
Perhaps most importantly of all, Nokia now counts a US company, the world’s biggest by market capitalization, as its second-biggest shareholder. On October 28, chips giant Nvidia bought a 3% stake in Nokia for a cash infusion of $1 billion. The move gives Nvidia unusual influence over Nokia’s technology roadmap and apparently comes with the proviso that it uses funds to build 5G and 6G products based on Nvidia’s graphics processing units and CUDA platform. It’s all about “powering America’s return to telecommunications leadership,” said the companies in a statement replete with references to America. Europe is mentioned not once.
The optimal scenario for Hotard would be a commercial deployment by T-Mobile US, its sole remaining big US customer, in 2027, when products become available. Hotard would be even happier if the benefits of that rollout for T-Mobile convinced AT&T and Verizon to reintroduce Nokia into their networks. “They are important customers for us,” he said in response to analyst questions at Nokia’s recent capital markets day in New York. “By the way, if you think about those two telcos where we don’t have presence in the radio networks today, we’ve got presence across most of the rest of the portfolio.”
Huawei bashing
His Americanism also shows in his willingness to criticize Europe for its continued tolerance of Chinese vendors in critical infrastructure. While predecessors were more circumspect on that topic, Hotard may feel there is nothing to lose after market share setbacks in China since the first Trump administration. Nokia’s revenues from Greater China, including China, Hong Kong and Taiwan, slumped from about $2.5 billion in 2018 to $1.3 billion last year. Ericsson’s peaked in 2020 at nearly $2 billion before dropping to less than $1.1 billion in 2024.
There would also be a considerable amount at stake, he believes, if the European Commission were stricter. “We are optimistic that the Commission is making progress on this, but the reality – for those who don’t know the history of the industry – is this has been talked about for a long time and very little has been implemented,” he said. “If you were to look at the opportunity today, I think you’d take something around €2 to €2.5 billion [$2.3 billion to 2.9 billion] of opportunity right now if there was a radical aggressive replacement, a more accelerated replacement, in the market just based on Huawei’s share and the size of the market.”
The risk is that such American-sounding rhetoric angers European customers still buying from Huawei. But Hotard has simultaneously argued that European governments must give operators a financial incentive to spend money on replacing Chinese products. This does not have to mean handouts or state aid, an approach reportedly under consideration in Germany. During a press conference with reporters in Finland several weeks ago, Hotard also urged regulators to “loosen” competition rules and allow European telcos to merge.
A more investor-friendly Europe may be essential if it is to halt the Americanization of the Nordic companies. Ericsson and Nokia provide rare examples of European supremacy over the US in a key technological area. It is why Ericsson accounts for more than half the 5G network equipment deployed by US telcos, and why Nvidia, with all its resources, still needed the RAN expertise of Nokia. It is in danger of being squandered.
https://www.lightreading.com/regulatory-politics/the-americanization-of-ericsson-and-nokia
