Ericsson withdraws from cable
Ercisson has revealed plans to shutter its cable manufacturing operations, and cut around 350 jobs in the process.
The telecom cable operations are part of Ericsson's Networks business unit, and its facilities are mainly located in Sweden.
The decision is notable for several reasons. First, it marks Ericsson's withdrawal from the telecom cable business.
Announcing the planned closure, Ericsson head of special products for Networks said the company is making the move “based on the fact that Ericsson's production of telecom cables is small from a global perspective, and that we also have a small market share.”
He added that the company's cable production“has not been operating at full capacity for a long time and has struggled with profitability.”
But the shutdown is also an indication of the shifting dynamics of the fixed-line market. It shows that fiber is finally starting to replace copper in terms of cable demand.
And because the majority of volumes for fiber cable are generated from Asia, cable production has been shifting towards the region.
Ericsson recorded net sales from its telecom cable business of around 1 billion krona ($151.4 million) in 2012. The company expects to incur restructuring costs of around 500 million krona from the closure, and will probably book the charges over two quarters.