Troubles in Ericsson's mobile phone business

Troubles in Ericsson's mobile phone business
In the United States, Ericsson partnered with General Electric in the early nineties, primarily to establish a US presence and brand recognition.
Ericsson had decided to obtain chips for its phones from a single source—a Philips facility in New Mexico. In March 2000, a fire at the Philips factory contaminated the sterile facility. Philips assured Ericsson and Nokia (their other major customer) that production would be delayed for no more than a week. When it became clear that production would actually be compromised for months, Ericsson was faced with a serious shortage. Nokia had already begun to obtain parts from alternative sources, but Ericsson's position was much worse as production of current models and the launch of new ones was held up.[9]
Ericsson, which had been in the cellular phone market for decades, and was the world's no. 3 cellular telephone handset maker, was struggling with huge losses. This was mainly due to this fire and its inability to produce cheaper phones like Nokia. To curtail the losses, it considered outsourcing production to Asian companies that could produce the handsets for lower costs.[according to whom?]
Speculation began about a possible sale by Ericsson of its mobile phone division, but the company's president said they had no plans to do so. "Mobile phones are really a core business for Ericsson. We wouldn't be as successful (in networks) if we didn't have phones", he said.[citation needed]


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