European vendors Nokia and Ericsson are believed to be sourcing components from China to locally manufactureand supply network gear to telcos in India, a scenario that could queer the pitch for New Delhi’s efforts to keep Chinese components and vendors out of the country’s telecom networks.
A Nokia spokesperson told ET that the Finnish gear maker “sources fab and components from 17 countries, including China as part of its global supply chain”.
The company added that its supply network consists of 31 factories around the globe and six hubs for customer fulfilment as it has a global manufacturing footprint designed for optimised global supply, and to mitigate against risks such as local disruptive events, transportation capacity problems and political risks.
Ericsson said it does not source any components from China’s Panda Electronics Group (PEG), one of the companies named by the US as potentially controlled by the Chinese military. Ericsson reportedly owns 51% in Nanjing Ericsson Panda Electronics, in which PEG-controlled Nanjing Panda Electronics is a minority shareholder.
But people familiar with the matter say Ericsson’s global supplier ecosystem includes other Chinese component suppliers. The Swedish gear maker declined to reveal the exact involvement of Chinese component suppliers. “Ericsson has a range of global companies as suppliers and we decline to comment on specific suppliers,” a company spokesperson said in response to ET’s queries.
Ericsson said it has a reliable supplier eco-system distributed across the globe, adding it has processes to ensure that development, production, shipping and deployment of its products, solutions and services meet the security, privacy and regulatory needs of customers.
The comments come amid India’s diktat to state-run telcos stop sourcing network equipment from Chinese vendors, amid Indo-China geopolitical tensions. Government sources say they may extend the missive to India’s private telcos such as Vodafone Idea and Bharti Airtel.
Both Nokia and Ericsson manufacture a host of gear in India such as radio network equipment like 2G, 3G, 4G and 5G base stations and microwave products at their factories in Chennai and Pune respectively.
Analysts said the prospect of both European vendors using some Chinese components could drive the government to stringently enforce local testing of all imported network gear from October 1, regardless of whether it is Chinese, European or Korean. Bharti Airtel and Vodafone Idea buy network gear from Ericsson, Nokia, Huawei and ZTE, while Reliance Jio only procures from South Korea’s Samsung.
Rajiv Sharma, research head at SBICaps Securities, said “it’s important for all network gear, Chinese and non-Chinese, to be locally tested in the interest of national security before deployment in Indian telecom networks as concerns around malware are now bigger as even Ericsson and Nokia are known to use Chinese components”. He added that sourcing of Chinese components by European vendors might even push the government to unveil policies that encourage mass local manufacturing of such components.
The government has recently banned Chinese mobile apps, including top social media platforms such as TikTok, Helo and instant messaging tool WeChat, to counter the threat posed by these apps to India’s sovereignty and security.