(MENAFN- The Peninsula) Ericsson, the world's biggest mobile network equipment maker, is winding down its modem business, shutting a loss-making unit with the departure of about 1,000 staff.
The decision comes amid falling prices of modems, rising demands on research and development and a shrinking market as more smartphone makers buy modems and processors, which Ericsson does not make, together.
The Swedish company had said it would evaluate the future of the business within 18 to 24 months of taking it on in 2013 when joint venture partner STMicroelectronics pulled out. Ericsson's chief executive said on Thursday the rapidly changing market meant the company had concluded it would be too expensive for the business to succeed.
The Swedish company said the decision to end the development of modems would mean it could shift resources to developing radio networks. Ericsson had targeted a top three market position for its modems business, which employs around 1,600 people, alongside US firms Qualcomm and Intel. The move to stop developing new modems would mean around 1,000 staff leaving Ericsson, Vestberg said. Some of the other employees would find work at a new research and development unit within Ericsson's core radio networks business that will be set up in Sweden's Lund and employ 500 in total.
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