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Swedish telecom equipment maker Ericsson ERIC-Q is investing $470-million to fund research and job creation at its Ottawa and Montreal facilities, and will receive an undisclosed amount of additional federal funding to do so.

Prime Minister Justin Trudeau announced the investment and funding Monday morning outside the company’s offices in Kanata, a tech hub in suburban Ottawa, alongside Ericsson chief executive officer Borje Ekholm and Industry Minister François-Philippe Champagne.

Speaking with The Globe and Mail prior to the announcement, Mr. Ekholm said the funding will go toward creating “hundreds of jobs” and upskilling workers over five years in five key areas: advanced 5G, 6G, quantum computing, artificial intelligence for mobile networks, cloud radio access networks and core networks (elements of telecommunications infrastructure).

Mr. Ekholm said the company decided to invest in Canada because of its tech talent and cultural fit. Already, Ottawa is Ericsson’s largest research and development facility in North America.

Mr. Champagne called the investment a “big win for Silicon Valley North” and “a vote of confidence for the country and its workers.”

The announcement was made as many major technology employers are facing a downturn, with many – including Ericsson itself – laying off thousands of employees as a result of slowing sales and economic uncertainty.

Ottawa is not yet disclosing the dollar value of its intended investment, which it committed to through a memorandum of understanding with the company. The investment will be delivered through the Strategic Innovation Fund, which is administered by Innovation, Science and Economic Development Canada. In an interview also before the announcement, Mr. Champagne said the contribution will be “largely in line” with other recent investments made through the fund.

Last October, ISED gave $40-million to Ericsson’s rival, Finnish telecommunications giant Nokia Corp., to expand 5G research, topping up the company’s own $340-million investment. Nokia also received a combined $32-million from municipal and provincial governments to tear down and rebuild its Ottawa research facility, adding commercial and residential units.

When asked why his company is not going down a similar construction route, Mr. Ekholm said he is “not a real estate investor,” and instead wants to work on developing talent. He said the company hopes to hire the first of its new employees in the second half of 2023. The new hires will include up to 60 additional interns a year – 300 across the five-year timeline – mostly in Ottawa and Montreal. The funding will also go toward equipment costs and the company’s newly announced Quantum Research Hub in Montreal.

Since 2018, the Strategic Innovation Fund has been used to attract large investments from companies such as Mastercard Inc. and Siemens AG. This investment strategy – one that stretches long before the fund – has drawn ire from some industry experts, including Benjamin Bergen, president of the Council of Canadian Innovators, who say that foreign companies funnel revenue and tax dollars back to their home countries and do not contribute to Canada’s intellectual property strategy.

“Intellectual property ownership and the ability to commercialize R&D are far more economically impactful than a relatively small number of jobs which will go to highly in-demand professionals who already have no trouble finding high-paying work,” Mr. Bergen said.

Canada ranks sixth among Group of Seven nations in the World Intellectual Property Organization’s 2022 global innovation index, and the country’s economic output per capita has been the worst among advanced nations in the Organization for Economic Co-operation and Development since the 1970s.

Yet Mr. Champagne has long been a strong advocate for foreign investment in Canada, emphasizing the growth of jobs and of critical technologies created here. In its last budget, the Liberal government added $500-million to the Strategic Investment Fund, prioritizing projects related to sustainability. The ramp-up in investment followed the lead of the United States, which has dedicated $500-billion through the Inflation Reduction Act and aggressively incentivizes green foreign investment.

“I’ve always said in a very competitive environment, governments have to be part of the equation,” Mr. Champagne said. “I can tell you that we never win on the money, because there are always people who can outspend Canada.”

Instead, he said, his strategy has been to promote Canada’s talent, resources, sustainable practices and culture. He hinted that talks with Ericsson started as early as May, 2022.

Ericsson has operated in Canada for more than 70 years and employs about 3,000 people here, according to Mr. Ekholm. In addition to its research and development activities, Ericsson provides 5G infrastructure products and services for BCE Inc.’s Bell Canada BCE-E, Telus Corp. T-T, Rogers Communications Inc. RBI-B-T and other carriers, and private network solutions for utility companies and mines.

When reporting on its last quarter in January, the company said it would reduce its head count in order to make up for slow sales of 5G equipment caused by concerns about the broader economy. The following month, an internal memo seen and reported on by Reuters showed that the company was planning to cut 8,500 jobs – about 12 per cent of its total global work force.

When asked if these planned cuts would affect Canadian workers, Mr. Ekholm told The Globe that the impact in Canada will be “very limited” and short term. He did not provide any details on these cuts, saying instead he plans to expand the company’s Canadian presence substantially with this new investment.

Follow Irene Galea on Twitter: @IreneHGaleaOpens in a new window

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