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Ericsson is to lay off nearly 20 per cent of its home-country workforce as it makes cuts in the face of intensifying competition from Chinese rivals and weak demand for its specialty wireless products.
Ericsson said it intends to cut 1,000 positions in production, 800 in research and development and 1,200 in other operations such as sales and administration, totaling a reduction of 3,000 of its 16,000 workforce in Sweden.
The announcement comes two months after Ericsson ousted its chief executive, Hans Vestberg, saying he had failed to reverse a protracted trend of declining profit and revenue. In late July, Jan Frykhammar was appointed acting CEO.
Ericsson is betting on the development of faster 5G wireless networks and software-based services such as the so-called Internet of Things and cloud computing. But the first revenues from 5G are several years away and the new businesses have been slow to take up, analysts say.
“Ericsson is going through a large transformation,” Frykhammar said. “The measures are necessary to secure Ericsson’s long-term competitiveness as well as technology and services leadership.”
Ericsson, which has around 115,000 employees world-wide, also said it would reduce the number of outside consultants in Sweden by 900. The company said it was in talks with unions over the planned job cuts.