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scale, so I'm not sure that will change. I rather see it going the other way." It sounds like a tacit acknowledgement that the operator-backed "open RAN" concept has not introduced much fresh and sustainable compe on into the market. What's in the box? To sa sfy poli cal wishes, goods sold to US customers are now largely made in America. But sourcing components while severing links with China remains a challenge. "For many components, China is the most efficient ecosystem," said Narvinger. "I think with given geopoli cs, there is more focus on also having capabili es outside China. It's usually not that you can't manufacture – it's more what you can manufacture at what cost point." The leading suppliers for printed circuit boards are s ll found mainly in China, Narvinger observes. And shi ing produc on to other countries is likely to have economic ramifica ons even if it is deemed geopoli cally essen al. "A few years back, you were always just looking at cost performance," he said. "Now there is another element, also – what's inside." Component prices, meanwhile, are rising quickly on the thermals of seemingly insa able demand for AI. Customers are likely to see the impact in higher prices for network products. But it could be even worse for telcos op ng to buy "virtual RAN" products that use general-purpose chips, according to Ericsson's execu ves. "In a way, you are paying for the flexibility by not u lizing everything as well as you would do with special purpose," said Narvinger. "Having general purpose probably becomes more expensive than having special purpose because then you have ensured you don't have memory that's not going to be used." It sounds like a new jus fica on for Ericsson's ongoing investment in the design of custom silicon. Hotard has led Nokia even further away from that with a share price-infla ng deal to use Nvidia's graphics processing units (GPUs) in RAN products. Last year, he described it as a "shi from proprietary to general-purpose hardware." It made sense, to numerous industry experts, who say vendors will not be able to afford the exorbitant costs of custom chip development in a rela vely small and shrinking market. Any possibility Ericsson would follow Nokia seems to have been scotched with Narvinger's appointment. He has vigorously championed the economic case for inves ng in purpose-built 5G. Newer designs do not represent a huge cost for Ericsson because it can build on what it has been doing for years, he has argued. Custom s ll beats general purpose on performance and probably always will. And using AI to improve RAN performance does not require GPUs, Ericsson's execu ves insist. New AI features offered with the latest purpose-built 5G products seem designed to prove it. Manufacturing op ons remain limited, though. Ericsson, of course, relies heavily on Taiwan's TSMC for its high-end silicon, with state-of-the-art 3-nanometer designs now in produc on. "I don't see many new players popping up on these advanced nodes," said Narvinger. "What we have seen is more that Intel builds fabs in Europe, or TSMC building, perhaps, in the US." Ericsson's roadmap involves the planned use of Intel's latest 18A (2-nanometer) process, which has suffered delays. While a rela onship with the US chipmaker looks poli cally expedient, and could make Ericsson less dependent on TSMC, Intel's financial difficul es remain a concern. Circumstances are evidently much tougher for Nokia, which has lost RAN deals in the lucra ve US market, partly to Ericsson. Unless Narvinger can successfully defend its turf and protect headline sales, Ericsson could find itself in the same predicament. To aid a huge increase in annual R&D spending – which has surged by 55% under Ekholm, to nearly SEK48.9 billion ($5.1 billion) last year – Ericsson has slashed headcount by more than 22,638 jobs over the same period. That has obviously meant cu ng lots of roles outside R&D, but it has not endangered compe veness, says Narvinger. Thanks to heavier automa on, Ericsson has far less need for people to set up and configure mobile sites. The second wave Perhaps the main worry for any RAN vendor and its shareholders is the weak appe te many telcos seem to have for investment on the same level in 6G – or even before it arrives. O -cited data from Omdia, a Light Reading sister company, shows spending on RAN products fell from $45 billion in 2022 to $35 billion last year. Dell'Oro, another analyst firm, this month predicted that cumula ve RAN revenue would be 10% to 20% lower in 6G than it was in 5G for the first six years. "I think it depends on how much trac on we see on new use cases, not the least how much more AI traffic you will see," said Narvinger when asked about the RAN outlook. "This is probably quite a difficult me to forecast, to be honest." He does, however, envisage a "second wave" of 5G rollout driven by markets such as India, Japan and the US. And he sounds less convinced by talk of purely so ware-upgradable RAN, advanced by companies keen to avoid a hardware refresh. "The more you can do with AI func onality – of course, that will help a bit," he said. "You will squeeze more out of the hardware that's already out there. But I s ll see that there is so much advancement on the hardware side as well that there will be a hardware refresh." Talk of demand in India, Japan and the US raises obvious ques ons about the outlook in Ericsson's European backyard. Tougher rules that prohibit operators from using Huawei would naturally be welcomed by Ericsson and Nokia. The UK, where authori es have ordered Huawei out of 5G networks by the end of next year, was Ericsson's third-biggest market in 2025. But the environment would also be improved by consolida on between telcos, Ekholm has repeatedly argued. On that point, Narvinger is in full agreement. "If you divide your volume by too many countries and too many CSPs, you sit with a challenging return on investment," he said. "The obvious thing that will happen is you try to reduce your capex, which I don't think benefits end users. It doesn't benefit Europe. There is a structural challenge that I think there is an increasing awareness about. But I don't see that it would slow down the world, and I think that's the scary part. We had be er make sure that Europe keeps up with the rest of it." Barring any surprises, Ekholm should be able to leave with his chin up. Ericsson's share price has more than doubled on his watch a er plunging to a low under predecessor Hans Vestberg. Ekholm's only real blunder, arguably, was the $6.2 billion acquisi on of Vonage in 2022. The idea was to generate new revenue streams for telcos by exposing and mone zing various 5G features. But Ericsson has wri en down Vonage by around $4 billion since then and reported a sequence of losses at the unit. The goal, however, is s ll to reinvigorate the telco business model. Customers earning more themselves are likely to spend more with their cri cal suppliers, Ekholm ra onalized, especially if that revenue growth is spurred by demand for network services. If Narvinger can realize that ambi on, he will be an undisputed triumph. Ar cle Credit: h ps://www.lightreading.com/5g/meet-ericsson-s-new- boss-same-ish-as-the-old-boss Talleycom.com You Connect the World. We Make it Easy. ® 15 SHEET® QUARTER 2 2026

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