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The Chinese are coming

The stunning impact of the Chinese telecom equipment manufacturers observed in South Asia in as early as 2005 is now being observed in the balance sheets of the old established equipment suppliers.  

Telecoms-equipment makers | Toughing it out | Economist.com

First, the market for wireless networks is beginning to mature. After years of bumper profits, telecoms operators are facing more competition and are having to cut costs. In America carriers have delayed purchases, which explains much of what went wrong for Alcatel-Lucent. In Europe operators are increasingly renting their networks out to virtual service providers and are sharing capacity. That has allowed them to delay network upgrades which would otherwise have boosted Ericsson’s and other telecoms-equipment firms’ earnings.

Second, Western firms face competition from two Chinese companies, Huawei and ZTE. In 2006 Huawei had revenues of $8.5 billion, up 42% from the year before. ZTE has grown even more quickly, and had revenues of $2 billion for the first half of 2007. The firms’ low cost bases allow them to offer prices up to two-fifths lower than their Western competitors’.

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1 Comment to The Chinese are coming

  1. Nuwan's Gravatar Nuwan
    October 28, 2007 at 8:06 am | Permalink

    Some of Lucent losses are in part due to actions in 2002, see story — http://www.cybercrime.gov/lucentSupIndict.htm

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