Nokia and Ericsson look east for 5G manufacturing and a new cost base

One critical success factor for 5G will be a transformation of its cost base. One important contribution to this would come from a more open, commoditized, WiFi-like ecosystem for 5G devices and components. The move towards such products, from home WiFi equipment to low cost, white box routers, has often been driven by non-traditional cellular players – Intel, trying to push its technologies into the closed mobile market; suppliers moving across from the WiFi industry; start-ups.

But now there are signs that, for all the conflicts of interest that a low cost hardware ecosystem would pose for the big cellular vendors, they are being forced by price pressures to go down that path too. Nokia, for instance, has begun early production of 5G New Radio (NR) equipment not in Europe, but its huge Indian plant in Chennai. And Ericsson has outsourced manufacture of its 5G home routers to Taiwan, traditionally the source of cheap boxes for WiFi or home broadband.

Nokia’s Chennai facility is a very advanced one, but India is unlikely to be among the first markets buying its wares, and to date, the sub-continent has failed to build up the kind of super-efficient manufacturing industry that Taiwan has.

However, this will be the first factory in India to produce 5G NR hardware, and the Economic Times reported that Nokia is also considering manufacturing IP and optic gear there.

Nokia insiders indicated that the reason to choose Chennai for the first wave of products was to keep costs very low, and to put Nokia in pole position to drive and shape an Indian wireless production industry, should that develop in 5G.

The Finnish firm will also, no doubt, have an eye on India’s attempts to force its operators to buy a large percentage of their network equipment from local producers by 2000 (and on reports that Huawei might suffer sanctions in the huge market).

All these are sound reasons to make Chennai the hub of Nokia’s 5G NR production, and the plant already ships various items to over 100 countries. “We are now pioneering 5G manufacturing in the country, making India and the world ready for 5G,” said Sanjay Malik, head of the India Market at Nokia.

Meanwhile, Ericsson is outsourcing the manufacture of its 5G mobile hotspot routers to  reduce cost and accelerate time to market. It is working with Wistron NeWeb (WNC), a Taiwanese manufacturer, on the devices, which are based on the Qualcomm Snapdragon X50 5G modem.

The vendor said a ready supply of test devices will help drive network performance testing but also added that there was a commercial form factor, which could be used in live service deployments at low cost.

Thomas Noren, head of 5G commercialization at Ericsson, said: “Having access to 5G devices is crucial for customer trials and interoperability tests. Together with WNC and Qualcomm, Ericsson continues to drive 5G commercial readiness for service providers by significantly improving the testing of 5G NR networks, and facilitating the testing and commercial launch of 5G services in the early phase of 5G introduction.”