India has the second highest number of employees after its headquarters in Sweden.
Of the 1,582 employees at its modem division, 689 are in Sweden, 235 in India, 216 in Germany, 206 in China and 122 in Finland.
Ericsson stated: "The company will discontinue future development of modems and shift parts of resources in modems to radio network research and development to better capture growth opportunities in this area."
The change in strategy for modems comes as the company completes its previously communicated evaluation of the future of the business, the NASDAQ-listed firm added.
"Ericsson will discontinue development of LTE (long-term evolution) thin modems with the intent to reduce or redeploy workforce. Now entering into local co-determination negotiations with employee representatives to determine next steps," it said.
Ericsson's LTE multi-mode modems targets smartphones, tablets and other connected devices.
A modem enables a computer or a smart device to transmit data over telephone, cable lines, optic fibres, etc.
"To capture opportunities in radio networks, especially within small cells, energy efficiency and M2M, Ericsson has an immediate need to increase its R&D resources by approximately 500 people," the firm said.