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AI Costs · Earnings · Ericsson · Telecom
Ericsson reported first-quarter profits below analyst expectations, driven by rising AI-related chip costs and weaker demand in North America, which pressured margins and revenue.
Global demand for AI solutions is increasing semiconductor prices, directly raising Ericsson's procurement costs, as CEO Börje Ekholm stated. CFO Lars Sandström indicated that customers will absorb some of these additional costs.
In North America, revenue declined compared to a year earlier, when telecom companies made significant investments. Sandström clarified that this earlier growth was partly temporary and influenced by external factors, while underlying demand remains stable.
Ericsson remains focused on the U.S. market, having secured a major deal with AT&T to help offset disappointing investments in other regions, Reuters noted. Ekholm emphasized Ericsson's strategy of strengthening its foundation through diversified supply chains and efficiency improvements to mitigate cost pressures.
The company expects little growth in the overall radio access network market but anticipates outperforming it, leveraging its position in mission-critical networks and enterprise solutions.
