China’s “black-box” security reviews squeeze Nokia and Ericsson

TL;DR

• New friction on foreign RAN/core deals: state buyers must submit Nokia/Ericsson contracts to the Cyberspace Administration of China for extended, opaque security checks — a hurdle domestic vendors largely avoid.
• Share erosion is visible: European vendors’ China footprint has declined in recent years as approvals slow and local-content requirements harden.
• Procurement asks now include bill-of-materials transparency and “local content” ratios, which slow bids and tilt evaluations toward domestic gear.
• Mirror image of Europe’s Huawei/ZTE curbs: expect more explicit reciprocity politics between Beijing and Brussels as both sides cite “national security.”

What happened — and why it’s different this time

China isn’t announcing a blanket ban. Instead, it’s adding systemic friction to foreign-gear purchases: every sizeable deal involving Nokia or Ericsson goes into a multi-month security-review pipeline with limited visibility into criteria or timelines. Buyers are instructed to capture exhaustive component documentation and local-content ratios. Even when approvals come, they often arrive too late for deployment windows — shifting spend to domestic providers by default.

This preserves formal optionality while producing a de facto localization outcome across RAN and core. The policy extends a longer trend toward “secure & controllable” tech stacks after cybersecurity-law updates broadened assessment triggers.

Procurement mechanics: how the “black-box” review tilts the table

1. Trigger: a state-affiliated buyer plans to procure radio/core gear from a foreign vendor.
2. Submission: the contract package goes to the CAC for vetting. Requirements commonly include an itemized bill of materials (down to sub-modules), software provenance, and the proportion of Chinese-made parts.
3. Asymmetry: local vendors are typically exempt from the same level of review, allowing shorter lead times and on-time deployment — the decisive advantage in operator planning cycles.
4. Outcome: even neutral outcomes (approval with conditions) often come too late. Buyers default to domestic gear to hit milestones. Result: structurally lower win-rates for Nokia/Ericsson.

Winners, losers — and the “symbolic share” problem

Likely beneficiaries in China

• Huawei (RAN, core, transport) and ZTE (RAN, fixed access) gain pricing power and roadmap influence across 5G-Advanced trials and early 6G pilots.
• Domestic silicon & optics vendors (RF front ends, OTN, coherent modules) see more attach as “local content” targets harden.

European vendors’ risk exposure

In pure revenue terms, China is a smaller slice for Nokia and Ericsson than a decade ago — but the loss still matters: you forfeit reference footprint in the world’s largest 5G market and early input into operator feature asks for 5G-Advanced/6G.

Reciprocity: Beijing’s answer to the Huawei/ZTE restrictions in Europe

Europe has pressed carriers to strip high-risk vendors from critical segments; China’s move mirrors that political logic from the other side. Expect Beijing to frame this as legitimate security review just as Brussels frames its own curbs — and to invoke reciprocity if the EU tightens coordination (e.g., on rip-and-replace deadlines or funding models).

The result isn’t a single global market; it’s a bifurcating telecom stack where cross-border interoperability increasingly rides on 3GPP compliance and neutral interop labs rather than commercial deployments.

Roadmap impacts: 5G-Advanced field tests and the long glide to 6G

• Feature velocity: with domestic vendors closer to operator labs, China’s field feedback loop (e.g., energy-savings on massive-MIMO, RedCap, NTN) will skew toward local implementations first.
• Standards influence: early customer references in China become leverage at 3GPP R19/R20 — operator-validated case studies carry weight.
• Open RAN: large internal O-RAN projects exist, but the commercial signal is clear: whatever is “open” still needs to be “local.” A domestic-first module and software supply chain is now a policy feature, not a bug.

For operators outside China: what changes Monday morning?

Pricing & lead times: as China tilts spend inward, domestic vendors have less incentive to price aggressively abroad; Nokia/Ericsson may sharpen pencils in India/SEA/EMEA to protect scale. Watch bid calendars in 2026 re-farms and 5G-A overlays.

Interoperability: global roaming will still ride 3GPP specs, but divergence in optional features and vendor-specific power-saving modes will widen. Multivendor interop testing gets more expensive — budget accordingly.

Security posture: expect more RFP requirements for software provenance, SBOMs, and tamper-evident supply chains. China’s procurement template (deep component transparency) is spreading elsewhere, too.

How we got here (quick policy timeline)

1. 2019–2023 (EU): progressive national-level curbs on Huawei/ZTE in core and, in some states, RAN; ongoing debates on “rip and replace.”
2. 2022 (China): cybersecurity-law updates expand the kinds of procurements that trigger security assessments; “secure & controllable” becomes default for critical infrastructure.
3. 2024–2025 (China): guidance pushes state buyers to prove local content; reports describe “black-box” reviews for foreign vendor deals with timelines that disadvantage overseas suppliers.

Related but distinct: some guidance focuses on removing US-made chips from operator networks by 2027 — a component-level policy separate from the purchase-review friction, though the intent overlaps (localize the stack).

Three scenarios for the next 18 months

1) Slow squeeze (base case)

Reviews add predictable delay; domestic vendors expand share in RAN refreshes, private-network pilots, and fixed access. Nokia/Ericsson still serve existing footprints but see new-logo wins dry up.

2) Tit-for-tat escalation

If EU capitals coordinate deeper Huawei/ZTE restrictions, Beijing hard-codes explicit localization thresholds or formalizes blacklists. European vendors’ China revenue trends toward maintenance-mode only.

3) Selective détente

Limited carve-outs appear in niches where foreign IP remains attractive (e.g., microwave backhaul, certain optical layers), tied to JV/tech-transfer or “deeper localization.” Converted wins remain narrow.

What to watch next

• Chinese operator capex guides (Q4/Q1): watch vendor mix for 5G-A overlays and fixed-access expansions.
• EU follow-through on coordinated Huawei/ZTE measures (and any EU funding for rip-and-replace).
• Standards milestones: which features pilot first in China vs. Europe/India (energy savings, RedCap, NTN)?
• SBOM/provenance clauses appearing in global RFPs, mirroring China’s documentation demands.

Operator checklist (actionable, vendor-neutral)

1. Audit optional-feature divergence: map which 5G-A options your current vendors prioritize; plan interop tests early for roaming partners on a diverging stack.
2. Budget for interop & conformance: add lab time for power-saving features and scheduler behavior across multivendor RAN.
3. Procurement hygiene: require SBOMs, signed firmware chains, and local-content declarations from all bidders to avoid asymmetric surprises.
4. Diversify spares & optics where feasible; avoid single-country dependencies for fiber modules and coherent DSPs.
5. Plan mid-band refarms with realistic lead times; assume some suppliers’ quotes will embed geopolitics-driven slack.

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• The HBM supply race and data-center geopolitics

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Sources

• Financial Times — China curbs use of Nokia & Ericsson in telecoms networks
• Reuters — summary of FT reporting
• Heise — English brief
• DataCenterDynamics — prior “rip-and-replace” chip guidance
• Economic Times (Reuters relay)