A Swedish appeals court has upheld a ruling by a lower court that banned Huawei from selling 5G network equipment in the country, in the latest setback to the Chinese telecoms company’s hopes of staging a comeback.

In 2020, Swedish telecom regulator PTS banned Huawei from supplying 5G equipment to Swedish mobile operators citing security concerns raised by Sweden’s security service, a decision the company challenged in the court.

A lower court last year confirmed that decision.

The issue arose after the United States alleged that China could use Huawei equipment for spying and European governments followed suit by tightening controls on Chinese-built 5G networks. Huawei has denied being a national security risk.

Sweden had asked telecom companies to remove telecom network supplied by Huawei and Chinese rival ZTE from existing infrastructure and core functions before Jan. 1, 2025.

Huawei’s Swedish unit said in a statement on Wednesday it was disappointed by the verdict from the Stockholm’s Administrative Court of Appeal.

“We will analyse the ruling, and evaluate our next steps, including other legal remedies under Swedish law and EU law, in order to continue to safeguard our legitimate rights and interests,” Huawei wrote.

Sweden’s tussle with Huawei has also led to Sweden-based Ericsson facing backlash in China.

The proportion of revenue Ericsson earns from China has dropped to around 3 percent of its total from 10-11 percent, and the Swedish company was forced to reduce its operations in one of its biggest markets, Reuters news report said.

Huawei ranked second in the 2021 EU Industrial R&D Investment Scoreboard as compared with third rank in 2020. Huawei claims that much of the global research that Huawei carries out takes place in Europe. Huawei set up its first research center in Sweden in 2000. Huawei employs over 2 400 researchers in 23 research centers across Europe, according to its website.