Sweden's world-class domestic industries originated in the 17th century from its vast natural resources of forests, rich iron ore and water power. Over the course of the 20th century, Swedish industry has evolved from traditional sectors with lower added value, such as wood and iron ore processing, to modern industries with a higher degree of skill and technology input, such as automobiles and precision and specialized engineering. The change of priorities became even more evident in the 1990s, with the emergence of new research-intensive industries, such as information technology and pharmaceuticals, which replaced the more traditional engineering industries as the driving force of growth and business activity.
During this transition, some sectors, like textiles and iron, contracted considerably while others, such as shipbuilding, have all but disappeared, but Swedish restructuring has been smooth in terms of economic and social stability. By 2000, major industries included information technology (telephone, radio, and computer equipment), communications, pharmaceuticals, precision equipment (bearings and armaments), high-quality steel, automobiles, electrical motors and other electrical equipment, printed and published goods (including software and popular music), home and office furnishings, and processed foods. Most of the manufacturing plants are private and small, though Sweden also accounts for 29 of the 500 largest companies in Europe, perhaps the highest number per capita in the world). Several of the world's most sophisticated and diversified engineering companies bear Swedish names, although many of them are now foreign-owned or in multinational cooperation. They include, among others, Volvo, Saab, Scania, Electrolux, SKF, and ABB. The most dynamic sector by the late 1990s was telecommunications and information technology, with Ericsson being the most outstanding company in that field.
The automotive sector, one of the most important industries, has lived through major changes in the 1990s due to global restructuring and consolidation. General Motors acquired a 50 percent equity stake in Saab in 1989, and GM acquired the remaining stake in 1999. In 1999, Volvo sold its car division to the Ford Motor Company. Volvo shifted gears to concentrate on commercial transport equipment, and in 1999 acquired 75 percent of Scania, the second major Swedish truck maker. Volvo thus became one of the world's largest manufacturers of heavy vehicles. Sweden also is a major manufacturer of pharmaceuticals; its Pharmacia company merged in 1995 with the U.S. group Upjohn, while Astra merged in 1998 with British Zeneca, to form AstraZeneca.
During the 1990s, the information technology industry has been by far the fastest-growing sector in Sweden. In 1999, the country had more than 250 information technology companies (including foreign-owned ones) with an annual revenue of more than US$10 million, and a huge number of smaller ones. By far the largest of them was Ericsson, with net sales of US$26 billion in 1999. Telia was its second largest company, in net sales and employees. Many important international information technology companies, including Intel, Microsoft, Hewlett-Packard and Nortel, have chosen Sweden as the base for their European operations or for advanced research and development.