STOCKHOLM – Shares in Swedish telecoms manufacturer Ericsson tumbled today after it announced it was suing South Korea’s Samsung, warning the dispute could see sales take a hit of over half a billion dollars in 2021.
In the first hour of trading on the Stockholm stock exchange, Ericsson’s share price was down around 7%.
The financial impact of the litigation, coupled with delays to renewals of license agreements and market conditions, could negatively impact Ericsson’s operating income by between 1 billion and 1.5 billion Swedish kronor (RM478 million and RM717 million) every quarter starting in the first quarter of 2021, the company said.
Ericsson, which is one of the leading suppliers of mobile network equipment alongside Finland’s Nokia and China’s Huawei, booked net sales of 227.2 billion kronor in 2019.
Ericsson said it had filed a suit with the district court for the Eastern District of Texas, accusing Samsung of “violating contractual commitments to negotiate in good faith and to license patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions.”
Many common technological standards, such as Wifi and Bluetooth, are protected by patents held by specific companies. In order for other manufacturers to use such essential technology the holders of such patents are obliged to grant licences on fair, reasonable and non-discriminatory terms.
In practice however negotiations over these licenses sometimes lead to conflicts between technology companies. – AFP, December 11, 2020
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