Ericsson is shutting down its modem business and may replace it with radio networks.
Ericsson, the world's biggest mobile network equipment manufacturer closes its modem business, phases out modems and in effect laid off 1,000 staff.
The contributing factor for the closing down of the department comes from the fast-changing market including falling prices and popularity of modems and increasing demands for research and development.
The company does not produce a combination of modems and processors, which smartphones today need in their hardware.
The company reported it would assess the status of its business within 18 to 24 months.
Ericsson's chief executive stated on Thurs. that it had to close the business as the market dictates it would be too costly to continue running the modem business.
The company will reportedly allocate the resources to other endeavors.
The Swedish company stated that they will open up radio networks in replacement of the modem business.
Ericsson had already nominated executives for its modem business which hires 1,600 people along with U.S. companies Qualcomm and Intel.
The decision to stop producing modems would entail 1,000 staff to lose their jobs, according to Hans Vestberg, Ericsson's Chief executive officer.
Some of the employees will be moved to a different unit at Ericsson's core radio networks business, focusing on research and development.
The radio network will be located in Sweden's Lund and will reportedly hire a total of 500 employees.
Other employees will continue to work on the M7450 modem launched in August, although it is uncertain until when they will still work because the production depends on the success of the smartphones that uses the modem.
During the three quarters since the launch of the modem business in Ericsson, the company has lost 1.7 billion Swedish crowns, or $238 million in operational costs.
