Ericsson gives up on modem business, with 1,000 jobs set to go

Ericsson is giving up on its modem business in order to refocus resources on small cells and other radio network research and development.

A year and a half ago, when [company]Ericsson[/company] and [company]STMicroelectronics[/company] agreed to the terms for the end of their ST-Ericsson joint venture, Ericsson chief Hans Vestberg said his company would keep the “thin modem” side of the business going, as the chips held “strategic value to the wireless industry.” Thin modems use very little power and draw their intelligence from associated mobile application processors.

Just a few months ago, the Swedish firm unveiled a $17 LTE thin modem called the M7450 (pictured above), which it pitched to manufacturers who would probably be going with Qualcomm’s rival products. This was a last-ditch attempt, though — Strategy Analytics estimated [company]Qualcomm[/company] had 92 percent of this market in 2013 and [company]Broadcom[/company], another player in this space, said in June that it was giving up on modems.

On Thursday, Ericsson said it too was discontinuing future development of modems. It said it would continue to deliver the M7450 to those who signed up for it, but that’s it – Ericsson’s radio network R&D needs 500 more people, and many of those in the modems division have the right expertise to move across.

Many don’t, though. The modems division spans Sweden, India, Germany, China and Finland, and currently employs 1,582 employees – Reuters quoted Vestberg as saying around 1,000 jobs, less than one percent of Ericsson’s total workforce, would be shed.

“We have concluded the first phase of the modems strategy by successfully delivering the Ericsson M7450 modem,” Vestberg said in the statement. “However, given the modem market dynamics and the development in small cells and indoor coverage markets, we believe resource re-allocation is more beneficial for the Ericsson Group and our customers overall.”