During the 1930s, L.M. Ericsson was affected by the Great Depression and the legacy of Ivar Kreuger. During the first three years of the decade, the number of telephones in the world fell by 2.8 million, and Ericsson’s foreign subsidiaries saw sales drop by almost half. At the same time, Telegrafverket in Sweden favored its own telephone production.
The crisis led to the establishment of cartels and diversification in the industry. For instance, L.M. Ericsson gained a Swedish monopoly on transmission equipment, which was important because Telegrafverket was making major investments in long-distance telephony. Amplifiers and “Pupin” loading coils were important Ericsson products.
One area with close links to telephony involved low-voltage products, in which in 1933 L.M. Ericsson reached a marketing agreement with ASEA. Negotiations were facilitated by the two companies having the same majority shareholder, the Wallenberg group. In practice this gave L.M. Ericsson sole rights to “manufacture, sell and install all apparatus and transmission systems intended for low-voltage applications”. This included electricity meters, measuring instruments, railway signaling equipment, light bulbs and valves for telegraphic use, telephones and radios. Similar agreements were reached on the production of cables.
The Second World War created demand for military materiel from the Swedish defense forces, and one of L.M. Ericsson’s precision products was a machine gun. Meters became a major product after the Siemens & Halske meter factory in Nuremburg was destroyed by bombing in 1943. In the same year L.M. Ericsson decided to build a special factory to manufacture meters at Ulvsunda and established a subsidiary, Ericssons Mätinstrument aktiebolag (ERMI). There was a similar impact on the production of valves, and L.M. Ericsson’s subsidiary Svenska Elektronrör, set up in 1938, was able to take over the Swedish market completely during the war.
Other Ericsson products included bill-counting machines, electric razors and autochangers for gramophones. The head of manufacturing described these developments “as if we had turned into centipedes” and hoped that it would be possible to amputate all the extra legs when the war ended.
In 1942, with an embargo on the export of technology, major elements of the Swedish radio industry joined to found Rifa, Radioindustrins Fabriksaktiebolag, which was mainly intended to supply Sweden with electric condensers. This company was bought in 1946 by L.M. Ericsson, and in the 1950s it began work on an American invention called the transistor.
The post-war period was marked by an exceptional boom that helped L.M. Ericsson renew its interest in telephones. There were many new approaches, including digital solutions. One of the earliest was PCM (Pulse Code Modulation, which translated analog signals into digital code and vice versa) for short-distance cable transmissions between exchanges.
In 1954 L.M. Ericsson presented its first prototype electronic exchange, the EMAX.
Author: Svenolof Karlsson & Anders Lugn