Nokia and Ericsson will be hit by tariffs, analysts told Fierce
It's an already shaky RAN market, so they may initially choose to eat costs
They could be further impacted if CSPs reduce their spending
As global markets continue to freefall after the Trump administration’s announcement of wide-ranging trade tariffs on April 2, Fierce decided to ask analysts about how the trade hit is affecting two Nordic telecom titans: Nokia and Ericsson.
Ericsson’s share price was down about 1% at one point today after a rough time last week. Nokia’s shares also were down around 2% today. Beyond the everyday fluctuation of stocks and shares, however, we wanted to get a viewpoint on how two of the most crucial Western telecom vendors would weather the tariff tempest.
Likely not well, although possibly better than some other vendors.
Nokia and Ericsson’s tariff toll
Asad Khan, 5G research director at SNS Telecom & IT, expects that the companies will eat the tariffs – at least initially – so as to not rock the already unsteady boat of the cellular RAN market.
“Although recent efforts to diversify supply chains and the presence of U.S. manufacturing operations will somewhat soften the blow ... the vast majority of enabling technology components [are] sourced from outside markets,” he told Fierce in an email.
“It’s likely that in the short term Ericsson and Nokia will choose to absorb these tariffs rather than risk upsetting demand in an already shaky wireless infrastructure market by passing costs onto mobile operators and other customers," Khan said.
Recon Analytics analyst Daryl Schoolar said Ericsson and Nokia could feel the impact of tariffs both directly and indirectly.
He noted that both Nokia and Ericsson build some equipment in the U.S. However, “that does not mean all the components that go into those products are U.S. built. Those components are subject to tariffs,” he added.
“Indirectly Ericsson and Nokia will be impacted by how the new tariffs directly impact their communication service provider partners,” Schoolar said.
Smartphone prices are expected to rise and operators will either take that on the chin or pass the costs onto consumers.
But how all of this will affect customers' communication spend is as yet unknown. “All this comes back to Ericsson and Nokia as CSPs could end up reducing their capex,” Schoolar concluded. “This problem will only get worse if tariffs on components raise equipment prices.”
Here's how we are covering Trump's tariffs and their impact on the telecom market here:
- Tariffs nibble at CSP stocks but take big bite out of Apple, telecom vendors
- Thanks tariffs! AI just got a lot more expensive for U.S. companies
- Trump’s new tariffs could be devastating for telco supply chains say analysts
- Tariff Watch: Live stock charts for the biggest telecom companies