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Ericsson unit to cut purchasing costs 50% -report

STOCKHOLM, Oct 14 (Reuters) - Telecom equipment maker Ericsson's ERICb.ST Networks division will slash purchasing costs by 50 percent in the next five years to keep up with competition from China, a Swedish paper reported on Wednesday.

Ny Teknik reported on its website that details in a recent company strategy document showed that Ericsson's Networks business had to slash costs due to pressure from Chinese competitors Huawei [HWT.UL] and ZTE 0763.HK.

“For purchasing, this means halving costs over five years,” the magazine quoted Ericsson as saying in the document.

The Networks division makes up about two-thirds of Ericsson’s sales.

For Ericsson, the world’s biggest supplier of cellphone network equipment, this will mean using fewer client-specific products and more standard components, the report said.

It will also require that each component offers more functions, and that the company reduces the number of platforms and continues its transition from hardware to software.

Ericsson declined to comment. (Editing by Will Waterman)

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