Huawei’s struggles open $5B opportunity for Ericsson, Nokia, others: analysts

According to a new report from Bloomberg Intelligence analyst Woo Jin Ho, growing concerns among governments across the world related to Huawei’s equipment could create a $5 billion opportunity for the Chinese vendor’s rivals, including Cisco, Ericsson, Nokia and Juniper.

“There's a $5 billion sales opportunity for Huawei's leading networking competitors should geopolitical woes escalate and security concerns play a role in decisions to purchase equipment,” wrote Bloomberg Intelligence analyst Woo Jin Ho in a recent report. “Huawei's market breadth creates opportunities in mobile infrastructure, routing and optical. Ericsson and Nokia would be well-positioned in mobile infrastructure, especially as networks prepare for 5G-network upgrades. Cisco and Juniper aim for gains in the router market, with Ciena targeting the optical segment. Nokia's Alcatel deal gave it presence in both the optical and router markets.”

Citing data from IHS, the research outfit noted that Huawei commands $5 billion worth of sales across the mobile networking, optical and routing markets—at least in regions outside of the United States and China—and that those sales could be captured by rivals if Huawei can’t counter concerns over the security of its equipment.

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Regulators in the United States for years have warned that Huawei’s equipment could create a channel into the nation’s telecom networks for Chinese spies. But those fears have recently spread to regulators in other countries: The governments of Australia, Japan, the UK, Germany and most recently New Zealand have all taken steps against products from Chinese companies like Huawei and ZTE.

This trend may have been aided though by U.S. officials; according to a new report in The Wall Street Journal, multiple U.S. officials have conducted outreach with foreign allies in an effort to persuade them to forgo the use of telecom equipment from Chinese-based companies like Huawei.

Huawei, for its part, continues to argue that its products do not pose a security threat.

Nonetheless, the issue could ultimately represent a major opportunity for companies like Ericsson and Nokia in the market for 5G wireless network equipment, particularly considering Huawei has captured a leading position in the global market for wireless networking equipment.