Government-owned wireless company China Mobile has cut its use of non-Chinese suppliers to 5.4 percent from 11 percent in its last 2020 buying round. Hardest hit was Sweden’s Ericsson, whose 5G gear sales were cut to a mere 1.9 percent, compared to 11 percent in the 2020 round. China stated the move was “retaliation” for Sweden’s decision to ban Huawei Technologies and ZTE Corp. gear from its 5G networks. The U.S. also banned Huawei, the world’s biggest mobile gear maker, from its networks as have other regions in the world.

The Wall Street Journal reports that, “the $35-billion global cellular-equipment market can be divided into three segments of roughly equal size: China, the U.S. and the rest of the world.”

China “increasingly relies on Chinese equipment” and, this year, “in a tender worth about $6 billion, China Mobile awarded about 60.5 percent of the value to Huawei, up from 57.7 percent in last year’s round.” ZTE got 31.2 percent and Datang Telecom Group got 2.8 percent. Nokia “won the biggest share for a foreign company at 3.5 percent.”

The rest of the world, with some notable exceptions such as Germany, are following Washington’s lead in avoiding Huawei gear. The U.S. ban was based on concerns that Beijing used the gear to spy. According to the Dell’Oro Group, “countries that have enacted or are considering restrictions against Huawei comprise more than 60 percent of the world’s cellular-equipment market.”

Raymond James telecom analyst Simon Leopold stated that, “under the current trajectory, the telecom industry seems to be becoming more polarized between East and West.”

Ericsson and Finland’s Nokia have been the biggest winners as countries avoid Chinese cellular equipment. Ericsson chief executive Börje Ekholm lobbied (unsuccessfully) to “reconsider the ban … [and] days before China Mobile announced the winners of the 5G equipment contracts, Ericsson reported losing $300 million in second-quarter sales in China.”

Ekholm stated that, “the Chinese market mattered not only for its size, but because Ericsson could learn from participating in the world’s most aggressive 5G rollout.”

Nokia was shut out of the 2020 5G equipment tender, so its 4 percent award was an improvement. Both companies’ small market share means they will not partake in China’s aggressive 5G rollout that included, thus far, “916,000 5G cellular sites, which accounts for about 70 percent of the world’s total,” and the goal to have 560 million 5G wireless subscribers by end of 2023.

As Europe and other parts of the world gear up for their 5G rollout, however, Ericsson and Nokia will benefit, noted Leopold. Nokia chief executive Pekka Lundmark said that it “has won roughly half of the potential deals that have stemmed from wireless carriers switching equipment suppliers for ‘politically driven reasons’.” Ericsson and Nokia are currently the “only major Western rivals to Huawei.”

In 2014, the European Union and China “struck a handshake deal to reserve roughly 25 percent of the Chinese telecom-equipment market for Ericsson and Nokia, but it was never enforced.”