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Ericsson (ERIC) Enables Smart Automation in China Factory

Zacks Equity Research

Ericsson ERIC recently announced that it has successfully completed the transformation (valued at SEK 500 million) of its existing factory in Nanjing, China. This marks a significant milestone in the company’s smart manufacturing capabilities as the facility is considered to be one of the most advanced in the industry.

The upgrade, which continued for 18 months, has seen Ericsson modernize the production process in preparation for the introduction and rapid deployments of 5G in China. This includes the first modular-designed automatic assembly line for 5G radios, which will enable the company to produce the latest 5G radios for the Chinese market.

Moreover, an advanced automatic packing line, which supports both 4G and 5G products, has been running since the second quarter of 2019. The Swedish telecom equipment maker has modernized 5G testing equipment to be more efficient and flexible across the product portfolio. It produces radio technology products at the factory, most of which support communication service providers in the Chinese market to increase network capacity and roll out 5G.

This facility is part of the company’s global supply chain and it follows the previous announcements on Ericsson digitizing its factory in Estonia and building a smart factory in the United States. Its global supply chain strategy ensures that it works close to customers through its European, Asian and American operations, and secures fast deliveries to meet customer needs.

Ericsson continues to focus on 5G system development and has undertaken several notable endeavors to position itself for market leadership. The growth in 5G subscriptions is estimated to be the fastest in North America with 63% of projected mobile subscriptions within the next five years, followed by North East Asia with 47% and Europe with 40%.

As 5G devices increasingly become available and more 5G networks go live, more than 10 million 5G subscriptions are estimated globally by the end of 2019. Ericsson has been working with operators to help in their network modernization, while optimizing on plenty of opportunities.

Ericsson’s shares have lost 9.6% against the industry’s growth of 16.8% in the year-to-date period. Favorable industry trends are likely to boost its long-term growth and profitability. The company intends to accelerate its planned cost cuts and efficiency measures.



Zacks Rank & Stocks to Consider

Ericsson currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include PCTEL, Inc. PCTI, Nokia Corp. NOK and Viasat, Inc. VSAT. While PCTEL sports a Zacks Rank #1 (Strong Buy), Nokia and Viasat carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PCTEL surpassed earnings estimates in each of the trailing four quarters, the average surprise being 110.4%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

Viasat surpassed earnings estimates in each of the trailing four quarters, the average surprise being 59.4%.

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